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Cryptocurrency Empire FTX Collapses into Bankruptcy

Cryptocurrency FTX
Sam Bankman-Fried had been one of the stars of the crypto scene. Credit: Cointelegraph, CC BY 3.0/Wikipedia

Cryptocurrency exchange FTX filed for bankruptcy in the US on Friday, seeking court protection as it looks for a way to return money to users.

Former boss Sam Bankman-Fried has also stepped down as chief executive, the company said. It is a massive turn of fortunes for the 30-year-old, who had headed the world’s second-largest crypto exchange.

In just over a week, his FTX empire has collapsed, shaking confidence in the already troubled crypto market.

“I’m really sorry, again, that we ended up here. Hopefully, things can find a way to recover,” Bankman-Fried, nicknamed the ‘King of Crypto’, wrote on Twitter on Friday.

“I was shocked to see things unravel the way they did.”

The filing in Delaware federal court on Friday included the main FTX international exchange, a US crypto marketplace, Bankman-Fried’s proprietary trading group Alameda Research and about 130 affiliated companies.

Customers withdraw funds from the cryptocurrency FTX exchange

Prior to the meltdown, Bankman-Fried had been one of the stars of the crypto scene, drawing comparisons to investment magnate Warren Buffett, with a net worth estimated at more than $15bn (£12.8bn) as recently as Monday, the BBC reports.

But rumors earlier this week that FTX and other firms owned by Bankman-Fried were on shaky financial ground prompted a mass of customers to try to withdraw funds from FTX, an exchange used to buy and sell digital tokens.

Facing a cash crunch, Bankman-Fried tried to organize a bailout but that failed, leaving FTX scrambling to raise billions of dollars and many customers unable to access their money.

The collapse of such a prominent group, which advertised during the US Super Bowl and whose shorts-wearing, charismatic founder was a leading donor to the Democratic party, has rocked the notoriously volatile crypto industry, the Financial Times says.

Bitcoin dropped 5 percent to a fresh two-year low of $16,492 after the FTX bankruptcy was announced. Changpeng Zhao, chief executive of Binance, earlier on Friday said the fall of FTX left crypto facing a financial crisis akin to 2008 and that more businesses could fail in its wake, the paper adds.

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