(Bloomberg) -- Sam Bankman-Fried's digital-asset empire filed for Chapter 11 bankruptcy in Delaware. His crypto trading company, Alameda Research, listed at least $10 billion of assets and liabilities each.
Cyprus has suspended FTX's license to operate an investment business in Europe. The crisis could lead to a tightening of US and EU crypto regulations. Wider crypto markets were hit by the fallout, with Bitcoin falling more than 8% at one point. Former Treasury Secretary Lawrence Summers compared the meltdown to that of Enron Corp.
Troubled crypto lender BlockFi said it can no longer operate as usual, citing “a lack of clarity” in relation to FTX. Earlier, Bankman-Fried said he's closing Alameda Research, the trading house at the center of speculation about whether his crypto exchange mishandled customer funds.
Key stories and developments:
- FTX Empire Goes Bankrupt, Capping Sudden Fall for Bankman-Fried
- SoftBank Is Said to Expect About $100 Million Loss on FTX Stake
- FTX's Sam Bankman-Fried Faces SEC Probe as His Empire Crumbles
- Crypto Markets Buckle as FTX Filing Spurs Search for Casualties
- FTX Retail Investors Fear Wipeout, Shaking Their Faith in Crypto
For crypto market prices: CRYP; for top crypto news: TOP CRYPTO
(Times are US Eastern Standard unless specified otherwise.)
FTX.US Employees Said to Explore Sale of Prized Asset LedgerX (3:00 p.m.)
FTX.US employees are exploring a sale of a digital currency futures and options exchange the company acquired in October 2021, according to people with knowledge of the matter. The unit, rebranded as FTX US Derivatives from LedgerX, was excluded from FTX.US's bankruptcy filing on Friday, Chief Executive Officer Zach Dexter said in a tweet.
FTX Withdraws US Derivatives Clearing Plan From CFTC (2:26 p.m.)
FTX's LedgerX has withdrawn a controversial plan under consideration by US regulators to cut the middleman out of Bitcoin and Ether futures trading, according to a person familiar with the matter. The Commodity Futures Trading Commission declined to comment. LedgerX didn't immediately respond to a request for comment.
FTX's European License Suspended by Cyprus Regulator (1:01 p.m.)
The Cyprus Securities and Exchange Commission said it had suspended FTX Europe's licence on suspicion of alleged violations of several laws, stating that “the company does not appear to comply at all times” with the conditions of its authorization. Other alleged violations included laws relating to the suitability of members of management, and FTX's safeguarding of customer assets.
Bloomberg News first reported the potential suspension earlier on Friday.
Genesis to Get $140 Million Infusion From DCG After FTX Collapse (11:52 a.m.)
Crypto brokerage Genesis will get a $140 million equity infusion from its parent company, the Digital Currency Group, after it disclosed its derivatives business has $175 million in funds locked in a FTX trading account.
FTX Empire Goes Bankrupt (11:12 a.m.)
After days trying to shore up his teetering crypto empire, Bankman-Fried sought Chapter 11 bankruptcy for more than 130 entities in the FTX Group, including Alameda.
Bankman-Fried resigned as chief executive officer of the FTX Group as part of the filings, and John J. Ray III was appointed to replace him, according to a statement. Ray, a turnaround and restructuring expert, has previously served senior roles in bankruptcies including Enron.
“I'm going to work on giving clarity on where things are in terms of user recovery ASAP,” Bankman-Fried said in a Twitter thread on Friday.
FTX Facing EU License Suspension (6:29 a.m.)
Cyprus is planning to suspend FTX.com's two-month-old license, which allows the troubled crypto exchange to operate throughout Europe, people with knowledge of the matter said.
An announcement on the decision could come as soon as Friday, said the people, who asked not to be named discussing internal deliberations. FTX said in September that it received the permit from the Cyprus Securities and Exchange Commission, covering the EU as well as Norway, Iceland and Lichtenstein.
Bankman-Fried Loses Entire Fortune (6 a.m.)
Sam Bankman-Fried's entire $16 billion fortune has now been wiped out, one of history's greatest-ever destructions of wealth.
The collapse of FTX and Alameda Research means assets owned by the mogul once likened to John Pierpont Morgan have become worthless. At the peak, the 30-year-old was worth $26 billion, and he was still worth almost $16 billion at the start of the week.
The Bloomberg Billionaires Index now values FTX's US business -- of which Bankman-Fried owns about 70% -- at $1.
Bitcoin Under Pressure (6:32 p.m. Hong Kong)
Shares in cryptocurrency-exposed companies edged lower on Friday, easing after yesterday's US CPI-fueled surge, with the price of Bitcoin under pressure amid the unfolding crisis at FTX. The price of Bitcoin fell 3.1% to around $17,255 as of 5:26 am New York time.
In US premarket trading, Coinbase was down 0.2%, Riot Blockchain down 0.7%, Marathon Digital fell 1.7%, MicroStrategy lost 0.6% and Hut 8 Mining slumped 2.3%.
Tighter Regulation on the Cards (6 p.m. Hong Kong)
Watchdogs and industry experts in both the US and Europe said the unraveling of Sam Bankman-Fried's crypto empire will lead to stricter rules and scrutiny.
In the US, the Financial Stability Board, which last month published a framework for regulating crypto assets, said it would do more work on exchanges and other service providers next year as the FTX implosion emphasized the need for tighter supervision. The comments echo remarks from two US senators, who said the FTX collapse shows that the Commodity Futures Trading Commission needs more oversight powers.
Marina Markezic, co-founder of the European Crypto Initiative, said FTX's collapse will have indirect consequences and “a tremendous effect on shaping up crypto regulation.”
Softbank Said to Expect About $100 Million Loss on FTX Stake (4:30 p.m. Hong Kong)
SoftBank Group invested just under $100 million in FTX.com and anticipates writing down the entire value of the stake, according to a person familiar with the matter.
The Japanese company had put in a total of less than $100 million and had kept the investment marked close to cost, rather than boosting the valuation and recording a profit, the person said, asking not to be identified because the details are private. SoftBank will likely write down the holding in the December quarter.
Binance CEO Talks about Regulators' Next Focus after Fresh Crypto Fallout (4 p.m. Hong Kong)
Regulators will look more closely at account balances and reserves at centralized crypto exchanges after the shocking unraveling of FTX.com, Binance CEO Zhao Changpeng said at a fintech event in Indonesia.
Binance decided to pull a proposal to take over FTX International within 24 hours of offering a letter of intent as it did not find much value in the deal, the CEO, known as CZ, said. The deal didn't make sense in financial terms, number of users and technology, according to CZ, speaking for the first time in public after the deal collapsed. He added that Binance will look at improving transparency and disclosures.
Crypto Markets Retreat on Concerns About FTX Contagion (12:35 p.m. Hong Kong)
Virtual coins were in retreat Friday, with the largest token Bitcoin falling as much as 5.5% and second-ranked Ether sinking almost 8% at one point. The crisis engulfing FTX and signs of spreading contagion undid investor sentiment.
Easing US inflation had delivered a fillip for risk assets generally on Thursday, propelling the biggest advance in a gauge of the top 100 crypto tokens since early September.
Crypto Lender Hodlnaut Uncertain About Recovery of Assets at FTX (noon Hong Kong)
About 72% of digital assets deployed by Hodlnaut on centralized exchanges were held with FTX, with an estimated market value of S$18.5 million ($13.3 million), its interim judicial managers said. The extent of the recovery of those digital assets is currently uncertain, they added.
Embattled Crypto Lender BlockFi Pauses Withdrawals (8:45 p.m.)
Troubled crypto lender BlockFi said in a statement on Twitter that the company can no longer operate business as usual, citing “a lack of clarity” on the status of FTX.com, FTX and Alameda Research.
The company said it is limiting platform activity and pausing client withdrawals. BlockFi asked customers not to deposit funds at this time.
FTX US Legal Chief Tells Working to Preserve Platform (8 p.m.)
FTX US general counsel Ryne Miller said in an internal memo he's working with advisers to preserve “whatever is preservable” of the crypto exchange.
“We should not be optimistic for an outcome that is positive,” Miller wrote. “I'm working with outside advisers to be best prepared to navigate FTX entities to next steps.”
Sponsor of Key US Crypto Bill That Empowers CFTC Is to Review Legislation (7 p.m.)
John Boozman, a lead co-sponsor on legislation that would give the Commodity Futures Trading Commission more power to oversee digital assets, said the bill's backers are “taking a top-down look to ensure it establishes the necessary safeguards the digital commodities market desperately needs.”
“Chairwoman Stabenow and I remain committed to advancing a final version of the DCCPA that creates a regulatory framework that allows for international cooperation and gives consumers greater confidence that their investments are safe,” he added.
He was referring to Debbie Stabenow, a leader of the Senate Agriculture Committee along with Boozman. DCCPA refers to the bill, the Digital Commodities Consumer Protection Act of 2022.
Broker Genesis' Derivatives Unit Has About $175 Million on FTX Platform (6:20 p.m.)
Crypto broker Genesis said its derivatives business has about $175 million “in locked funds” in the company's FTX trading account.
“This does not impact our market-making activities,” the firm said in a Twitter thread, adding “our operating capital and net positions in FTX are not material to our business.”
The fallout from the collapse of the FTX empire has left investors on edge about the risk of contagion.
Bahamas Seeks to Place FTX.com Into Receivership (5:50 p.m.)
The Bahamas Securities Commission has frozen the assets of FTX Digital Markets “and related parties.” An asset freeze was “the prudent course of action” to preserve assets and stabilize the company, the agency said Thursday in a statement.
An attorney has been appointed provisional liquidator as the Bahamas securities regulator seeks to place the beleaguered crypto exchange into receivership.
“The commission is aware of public statements suggesting that clients' assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the commission's information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful,” it said.
Junior Employees Try to Sell Assets With Bankman-Fried Away (2:20 p.m.)
Employees of the US-based crypto exchange are in talks about selling parts of the business, including some assets that Bankman-Fried amassed on a sweeping acquisition tear across the industry, according to two people with direct knowledge of the matter, who requested anonymity because the talks were private.
White House Is Monitoring Crypto Markets (1:52 p.m.)
The Biden administration is aware of recent developments surrounding cryptocurrencies and will “continue to monitor the situation,” White House Press Secretary Karine Jean-Pierre told reporters on Thursday.
Jean-Pierre said the White House believes cryptocurrency markets require “proper oversight,” but declined to comment on specific steps regulators can or should take.
“The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed,” Jean-Pierre said at her daily press briefing.
FTX US Says Trading May Be Halted in a Few Days (1:31 p.m.)
FTX US, the American entity of Bankman-Fried's crypto exchange, said trading may be halted on it in a few days. FTX.com and FTX US are separate entities with separate management personnel, tech infrastructure, and licensing, but have similar owners and investors, representatives for the firms have said in the past.
Japan Cracks Down on Local FTX Unit; Freezes Exchange Activity (12:52 p.m.)
Japan's government has ordered FTX.com's local subsidiary to suspend some of its operations, saying it has no structure in place to properly offer cryptocurrency exchange services to users.
FTX Resumes Withdrawals After Two-Day Pause (12:28 p.m.)
FTX.com has resumed withdrawals on the platform, according to blockchain data, after halting such activities on Tuesday. Nansen and Kaiko, another blockchain data firm, both confirmed the resumed activities. FTX processed $8 million worth of withdrawals in an hour on Thursday, Nansen said.
Bankman-Fried Shuts Down Trading Firm (11:40 a.m.)
Bankman-Fried is shutting down Alameda Research, the trading house at the heart of his digital-asset empire, as he seeks last-ditch financing to save his troubled crypto exchange FTX.
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