The cryptocurrency exchange FTX has collapsed and filed for bankruptcy, deflating the entire crypto market with it.
In brief, here’s what happened. Chanpeng Zhao, CEO of the world’s largest crypto exchange Binance, once owned a 20% stake in FTX. He and FTX’s CEO, supposed crypto wunderkind Sam Bankman-Fried, maintained a friendly rivalry. Bankman-Fried, known to the technorati as SBF (Zhao is “CZ”), bought out Zhao’s stake using crypto tokens issued by FTX in 2021. In early November of 2022, following the souring of CZ and SBF’s relationship, the Binance CEO sold those tokens, sending their value tumbling. In response, FTX users scrambled to withdraw some $6 billion in less than 72 hours, money that FTX did not have on hand, largely because it had transferred the assets to its sister company, Alameda Research. Alameda Research made risky crypto bets that didn’t pay off, preventing it from returning SBF announced on Nov. 8 that Binance would acquire FTX, effectively bailing the beleaguered exchange out. CZ did some due diligence, though, and backed out of the deal. SBF desperately sought out investors, who did not materialize. Thus FTX filed for Chapter 11 bankruptcy protections in Delaware court.
Because FTX is a tangled network of companies, shells, and related entities, its bankruptcy proceedings promise to be complicated. To make things easier to follow, researcher Seamus Hughes, deputy director of the Program on Extremism at George Washington University, compiled all the bankruptcy court filings into one handy list. This post originally appeared in Hughes’ newsletter, Court Watch.
It’s been a busy week in the cryptocurrency world, to say the least. With FTX collapsing and a lot of moving parts, I thought it might be useful to pull all the bankruptcy filings made so far.
That’s it for now.