FTX Files for Bankruptcy as CEO Sam Bankman-Fried Resigns

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“I’m really sorry, again, that we ended up here,” Mr. Bankman-Fried said on Twitter on Friday. “Hopefully this can bring some amount of transparency, trust, and governance.”

The bankruptcy filing marks the start of what will probably be months or even years of legal fallout, as lawyers try to work out whether the exchange can ever continue to operate in some form and customers demand compensation. FTX is already the target of investigations by the Securities and Exchange Commission and the Justice Department, with investigators focused on whether the company improperly used customer funds to prop up Alameda Research, a trading firm that Mr. Bankman-Fried also founded.

The bankruptcy filing included FTX, its U.S. arm and Alameda. According to a bare-bones legal filing in U.S. Bankruptcy Court in Delaware, FTX has assets valued between $10 billion and $50 billion, with the size of its liabilities in the same range. The company has more than 100,000 creditors, the filing said.

The bankruptcy is a stunning fall from grace for the 30-year-old Mr. Bankman-Fried, who cultivated a reputation as a boy genius with a host of endearing quirks, including a habit of sleeping on a beanbag at the office. At one point, he was one of the richest people in the industry, with an estimated fortune of $24 billion. He hobnobbed with actors, professional athletes and former world leaders.

Mr. Bankman-Fried’s crypto empire had an elaborate structure. The bankruptcy filing lists more than 130 corporate entities affiliated with FTX and Alameda. But as of June, FTX had only about 300 employees, a point of pride for Mr. Bankman-Fried, who said he had resisted calls from venture investors to hire more staff.

“We told them additional employees added too quickly were net negative,” Mr. Bankman-Fried said on Twitter in June. “They could take it or leave it.”

Unusually for a major start-up, none of FTX’s investors had seats on the board, which instead consisted of Mr. Bankman-Fried, another FTX executive and a lawyer in Antigua and Barbuda.

FTX and Alameda were based in the Bahamas, where Mr. Bankman-Fried and a small circle of top executives called most of the shots and lived together in a luxury resort. Officially, Alameda was run by Caroline Ellison, a former trader for the hedge fund Jane Street, but Mr. Bankman-Fried was heavily involved, contributing to the decision-making on big trades, according to a person familiar with the matter.