FTX appoints 5 new directors as bankruptcy proceeding starts

Adeniyi Odukoya

FTX has announced a slate of new independent directors to oversee the collapsed crypto empire as proceedings for its bankruptcy filing begin.

The crash of FTX has disrupted the crypto market and negatively impacted some FinTech startups. The value of major cryptocurrencies has dropped, and other crypto stakeholders are exploring ways to mitigate the market damage.

The crypto exchange was the second largest in the world by trading volume, with a $32 billion valuation as of January. The recent events have spurred investigations by the U.S. Justice Department, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), a source with knowledge of the investigations told Reuters.

FTX filed for bankruptcy protection on Friday after traders withdrew $6 billion from the platform in 72 hours and rival exchange Binance abandoned a rescue deal.

After announcing its decision to acquire the embattled rival crypto exchange last week, Binance disclosed that it would walk away from the deal after going through FTX’s financials and structure.

Read also: Nigerian startup Nestcoin lays off staff, declares FTX held assets.

Via its official Twitter handle, Binance claimed that regulatory pressure and other factors impacted its decision. It claimed that the company reviewed FTX’s books and decided to leave their non-binding agreement. The statement said:

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”

The exchange also disclosed that Chief Executive Sam Bankman-Fried resigned from his position but would remain at the company to assist with an orderly transition.

The latest statement on Tuesday explained that the embattled cryptocurrency exchange is currently speaking with the US Attorney’s Office and ‘dozens’ of US and international regulatory agencies.

FTX disclosed a severe liquidity crisis and confirmed that it had responded to a cyber attack on Nov. 11 after saying on Saturday it had seen “unauthorized transactions on its platform.

Sam Bankman FTX

Read also: Binance to start Recovery Fund for crypto projects in crisis

“WE faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the court filing stated. “Questions arose about Mr. Bankman-Fried’s leadership and handling the exchange’s complex array of assets and businesses under his direction.”

The filing also revealed the reasons for appointing five new independent directors at each major company, including Alameda research.

Read also: Crypto market in turmoil as Binance back out from FTX deal

The Delaware bankruptcy court ruled that the relief requested was in the interests of the debtors, creditors and all parties. The filing stated the “Debtors’ Chapter l1 Cases are complex, consisting of over one hundred debtor entities and involving non-traditional assets.” The embattled crypto exchange has engaged Alvarez & Marsal as financial advisors.

Read more: Binance vs FTX war: Here is all you need to know

FTX’s new directors

John J. Ray III, who replaced the former CEO Sam Bankman-Fried on Friday, appointed the new directors. The lawyers for the company wrote, ‘John J. Ray III appointed the new directors to ensure proper corporate governance during FTX’s bankruptcy.

According to the filing, Mitchell Sonkin was appointed as a director at West Realm Shires, Matthew Rosenberg at Alameda Research and Rishi Jain at Clifton Bay Investments. Former U.S. District Court Judge Joseph Farnan and Matthew Doheny will oversee FTX Trading.

Crypto enthusiasts have distanced themselves from the embattled exchange, while Bitcoin, with losses of 19% this month and other tokens continue to suffer. Government officials in the USA and Europe have called for crypto finance to come under greater regulatory scrutiny.

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