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Crypto exchange FTX filed for a Chapter 11 bankruptcy proceedings, which includes FTX Intl, Alameda, and FTX US, in the US on Friday.
An official announcement by the exchange notes the appointment of new CEO John Jay Ray III and the resignation of Sam Bankman-Fried, who is the co-founder of FTX. Ray is better known as the lawyer hired to clean up Enron in the early-mid 2000s.
With Chapter 11, FTX will be given an automatic moratorium, meaning that creditors cannot enforce debt claims or enforce rights against any security or collateral without the permission of the courts. Chapter 11 is usually used by businesses to help them reorganize their debts and repay creditors while continuing their operations.
“In a Chapter 11 process, potential acquirers can look through FTX’s assets and only acquire the assets that they actually want…So if a player were to actually consider ‘bailing out’ FTX customers, it makes far more sense doing it out of a Chapter 11 process because you get to leave behind whatever you don’t want in the burning dumpster fire which @SBF_FTX created,” wassielawyer said on Twitter.
The UK-qualified lawyer said Chapter 11 in this case is a “good thing” as it “freezes the company and stops any shenanigans on the side (the Bahamas loophole, TRON facility etc) and gives it some time to actually find a sensible solution to this mess.”
WuBlockchain noted that at the start of bankruptcy and reorganization, FTX and FTX US have aggregated assets to 0x59abf3837fa962d6853b4cc0a19513aa031fd32b. The address currently holds about 19,500 ETH, 34,000 stETH, 33.8 million DAI, etc., or about US$287 million.
In any case, users shouldn’t expect to get their funds back any time soon.