BitBoy has accused FTX of extorting Justin Sun, as FTX Group filed for bankruptcy amidst insolvency concerns, with Sam Bankman-Fried (SBF) resigning as CEO.
The FTX Group has finally taken the same route as crypto lender Celsius Network, as it files for a Chapter 11 bankruptcy amidst an inability to address its growing liquidity crunch predicament, as customers attempt to withdraw their funds in droves following insolvency concerns. The FTX Chief Sam Bankman-Fried (SBF) has also resigned as CEO.
Amidst reports of the bankruptcy proceedings, crypto influencer BitBoy has accused Sam Bankman-Fried of extorting billions from Justin Sun.
FTX Trading Limited, otherwise known as FTX.com, announced the development in a recent press release which was disclosed to the crypto community on Twitter Friday. According to the press release, the bankruptcy filing includes FTX.com; West Realm Shire Services Inc, also known as FTX US; Alameda Research Ltd; and 130 more companies affiliated to the FTX Group.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
Nonetheless, subsidiary firms such as FTX Digital Markets Ltd, FTX Australia Pty Ltd, LedgerX LLC, and FTX Express Pay Ltd are not included in the bankruptcy filing, as indicated in the press release.
Blockworks shared the names of all 134 FTX firms.
134 of FTX's firms filed for bankruptcy:
1. Alameda Aus Pty Ltd
2. Alameda Global Services Ltd.
3. Alameda Research (Bahamas) Ltd
4. Alameda Research Holdings Inc.
5. Alameda Research KK
6. Alameda Research LLC
7. Alameda Research Ltd
8. Alameda Research Pte Ltd
— Blockworks (@Blockworks_) November 11, 2022
The Chapter 11 Bankruptcy proceedings have already begun in the US, as John J. Ray III replaced SBF as CEO following his resignation. Notwithstanding his resignation, SBF will remain involved in the company’s processes to assist in the proceedings and transition.
“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” Ray remarked, speaking on the development.
He further highlighted that the team transitioned into the scene only new, and the recent events have been unfolding quickly, appealing to stakeholders to acknowledge this fact. Ray brings experience to the table for FTX, having held several similar positions in different entities, including Norten Networks and Enron Corp.
FTX’s bankruptcy filing appears to be the company’s last resort, as efforts to address its growing concerns of a bank run, which included intervention from Justin Sun and solicitation for funds to meet up to withdrawal demands, proved futile. Previous reports have estimated a hole in FTX’s balance sheet to $9B.
Questions were raised on the effects of Tron’s Justin Sun’s intervention if FTX is already filing for bankruptcy. In response, crypto influencer BitBoy alleged that SBF only extorted funds to the tune of billions of dollars from Sun “and then moved on to the next thing.”
No SBF just extorted Justin Sun for a billion dollars and then moved on to the next thing https://t.co/EDC1zjhkvb
— Ben Armstrong (@Bitboy_Crypto) November 11, 2022
A Reuters report noted that Justin Sun had pledged to assist FTX in addressing its growing concerns by providing billions of dollars in aid to the embattled entity.
Additionally, certain individuals with knowledge of the matter had revealed that SBF was planning to raise $1B each from Sun, Tether, and OKX. Nevertheless, Tether’s CTO Paolo Ardoino mentioned in a tweet Thursday that Tether has no plans to assist FTX.
The press release said that the bankruptcy would help ensure a proper process to assess its assets to satiate stakeholders.
Following Binance’s CZ disclosure of the exchange’s decision to liquidate its FTT holdings, the ensuing drama on Crypto Twitter led to a series of worrisome revelations that triggered a mass withdrawal of funds on FTX.com and a wave of FTT selloffs that massively impacted the asset, as it tanked by over 80% in a few days.
The following issues led to growing insolvency concerns, with Binance coming in to assist FTX in a bailout process that would feature a full acquisition. Notwithstanding, Binance backed out of the deal following a due diligence process, as it highlighted a pattern of mismanagement of funds and alleged investigations from US agencies.
In a few days, FTX went from a major entity valued at about $32B to another embattled cryptocurrency firm as it witnessed a collapse in liquidity amidst the bank run. The company’s resort to bankruptcy indicates its hopelessness in meeting customer and stakeholder demands.