WASHINGTON: Cryptocurrency exchange FTX has filed for bankruptcy in the US. The company has sought protection from the court and is exploring ways to return the money to the customers.
Sam Bankman-Fried, the chief executive of the company that runs the world's second largest crypto exchange, has resigned from his position on Friday, after a liquidity crisis that has prompted intervention from regulators around the world.
The FTX empire collapsed in just a week, shaking the confidence of the already troubled crypto market.
FTX, its affiliated crypto trading fund Alameda Research and about 130 other companies have commenced voluntary Chapter 11 bankruptcy proceedings in Delaware, FTX said.
Shares of cryptocurrency and blockchain-related firms dropped on Friday after FTX, one of the biggest crypto exchanges, said it would initiate bankruptcy proceedings in the United States, triggering a potentially massive meltdown in the industry.
Sam, popularly known as the King of Crypto, wrote on Twitter, "I apologize once again that we ended up here. Hope things get better. Hopefully we can bring transparency and trust to the process." "
"I'm amazed at the way things have turned out."
Sam Bankman was one of the stars of the crypto market before the company sank.
He was being compared to veteran investor Warren Buffett. His net worth is around $15 billion.
Rumors also spread that the financial situation of Sam-owned FTX and other firms had worsened earlier this week when a large number of customers simultaneously started trying to withdraw money from FTX.
FTX was used to buy and sell digital tokens.
Seeing the lack of cash, Sam tried to arrange a bailout but he failed. Due to this, the money of many customers got stuck in FTX, which they are not able to withdraw now.
After filing for bankruptcy, the company can continue to run under court supervision and restructure its debt.