In a notice posted to the FTX official Twitter account this morning, the company announced that Sam Bankman-Fried would step down as CEO of the FTX Group.
According to the note, approximately 130 companies affiliated with Bankman-Fried’s FTX Group have also filed for voluntary bankruptcy.
FTX has “valuable assets that can only be effectively administered in an organized, joint process,” according to new CEO John J. Ray III, who also noted that the Chapter 11 proceedings do not include LedgerX LLC, FTX Digital Markets Ltd, FTX Australia Pty Ltd., and FTX Express Pay Ltd.
FTX is said to have a massive hole in its balance sheet, with some estimates ranging up to $9 billion.
Bankman-Fried’s $32 billion company has collapsed in the face of mounting evidence that the relationship between FTX and Alameda Research, the trading arm he also co-founded, was toxic.
Regulatory and legal authorities are now investigating that relationship, as well as the claim that FTX loaned customer funds to Alameda, which the latter used to make risky crypto bets.
This year’s bankruptcy proceedings are not unusual in the industry. Voyager Digital declared bankruptcy in early July, while cryptocurrency lender Celsius declared bankruptcy a week later, following the collapse of Terra’s algorithmic stablecoin.