“I’m so sorry, once again, that we ended up here,” Bankman-Fred said on Twitter on Friday. “We hope this brings a measure of transparency, trust and governance.”
The bankruptcy filing marks the beginning of what could be months or even years of legal ramifications as lawyers try to see if the exchange can somehow continue to operate and clients seek damages. FTX is already the subject of investigations by the Securities and Exchange Commission and the Justice Department, with investigators focusing on whether the company misused client funds to support Alameda Research, a trading company also founded by Fred Bankman.
The bankruptcy filing included FTX, its US arm and Alameda. According to a basic legal filing in the US Bankruptcy Court in Delaware, FTX has assets of between $10 billion and $50 billion, with the size of its liabilities in the same range. The file said the company has more than 100,000 creditors.
Bankruptcy is a headlong plunge for 30-year-old banker Fried, who has built his reputation as a boy genius with a host of endearing quirks, including a habit of sleeping on a bean bag in the office. At one point, he was one of the richest people in the industry, as Fortune estimated $24 billion. Contract actors, professional athletes and former world leaders.
Mr. Bankman-Fried’s crypto empire had a complex 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 source of pride for Bankman-Fried, who said he had resisted calls from venture investors to hire more staff.
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“We told them additional staff were added too quickly and it was a negative,” Bankman-Fried said. He said on Twitter in June. “They can take it or leave it.”
Unusually for a major startup, none of FTX’s investors had board seats, leading to While It’s comprised of Mr. Bankman Fried, another FTX executive and lawyer in Antigua and Barbuda.
FTX and Alameda were based in the Bahamas, where Bankman-Fried and a small circle of CEOs did most of the shooting and lived together in a luxury resort. Formally, Alameda was run by former Jane Street hedge fund trader Carolyn Ellison, but Bankman-Fried was heavily involved and helped decide on big deals, according to a person familiar with the matter.