The FTX group has filed for Chapter 11 Voluntary Bankruptcy in the United States District of Delaware. Sam Bankman-Fried resigned as CEO. The new CEO is John J Ray III, who held the same position at Enron.

The entities involved in the bankruptcy include FTX.com, FTX.US (Wests Realm Shires), Alameda Research and 130 other entities. Does not include the US derivatives business (LedgerX), FTX Digital Markets (Bahamas affiliate with frozen assets), FTX Express Pay and the Australian affiliate.

The news comes as Bankman-Fried has been struggling to find bailouts as an alternative to Binance, which pulled out of a deal earlier this week.

“The immediate Chapter 11 relief is appropriate to provide the FTX Group with an opportunity to assess the situation and develop a process to maximize recoveries for stakeholders,” Mr. Ray said in a statement. statement. “FTX Group has valuable assets that can only be managed effectively in an organized joint process.”

On Crypto Twitter, the former head of institutional sales for FTX, Zan Tackett, suggested clients reduce their holdings and a new tab instead of years-old bankruptcy proceedings, which would enrich the consultants. This is an approach taken by crypto exchange Bitfinex a few years ago after a hack.

The cost and delay of bankruptcy are very valid points. However, the reason for using third parties is to address issues of trust. For example, hypothetically, a bankrupt company could present a truncated list of clients who get haircuts and ‘misplace’ other clients who receive nothing. Some, but not all, of the delay is involved in allowing people to file claims.

A hole in the balance sheet of $700 million or $2.7 billion?

Tackett also shared some numbers with the caveat that they are not concrete and have not been verified. Since he worked for the company until yesterday, we must assume that these are internal figures.

He described the liabilities as $8.8 billion.

Liquid assets: $900m (USD/JPY/DAI)
Less liquid: $2 billion (GBTC/ETH/SOL)
Illiquid: $3.2 billion (equity investments)

Giving a capital hole of $2.7 billion

However, it also mentioned another $2 billion in assets not included for ‘liquidity/correlation’ reasons; it is necessary to clarify what they are.