FTX Enters Chapter 11 as Bankman-Fried Steps Down

FTX Trading Ltd. and a sprawling group of affiliates entered Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on November 11, 2022, ending a frantic search for private rescue capital and moving one of crypto’s largest trading businesses into court-supervised reorganization. Sam Bankman-Fried stepped down as chief executive, and restructuring specialist John J. Ray III took control.

The filing was consequential not simply because another crypto company failed. FTX sat at the center of trading, custody, venture investment and token-market relationships. The petition’s Annex 1 named 134 debtors, including FTX Trading, Alameda Research entities, FTX US Trading and businesses spread across multiple jurisdictions. That breadth immediately turned a liquidity crisis at an exchange into an industry-wide counterparty and asset-recovery problem.

What the filing established

The voluntary petition in case 22-11068 was filed and signed by Ray on November 11. A corporate authorization dated November 10 recorded Bankman-Fried’s approval of Ray’s appointment and gave the new chief executive broad authority over bankruptcy and restructuring actions. The same filing said the debtors would seek joint administration under FTX Trading’s case number.

Those documents established the legal transition. They did not establish the size of any customer shortfall, the recoverable value of the group’s assets or whether every balance displayed on an FTX platform would become an allowed bankruptcy claim. On November 11, those were unresolved questions. Chapter 11 created a forum for preserving and examining the estate; it did not guarantee customers full or prompt repayment.

The inclusion of FTX US was particularly significant. The domestic platform had been presented as separate from FTX.com, yet FTX US Trading appeared among the debtors listed in the petition. For customers and counterparties, corporate labels were therefore less useful than the actual debtor map, custody arrangements and intercompany records—materials that were not yet fully available on November 11.

A crisis compressed into one week

The bankruptcy followed a run of withdrawal demands and the collapse of an attempted acquisition by Binance. Reuters reported on November 11 that FTX had struggled to raise funds after the wave of withdrawals and that the proposed Binance transaction had been abandoned earlier in the week. The sequence mattered: by the time the petition arrived, the event was no longer only a confidence shock or a token-price dispute. It had become a formal insolvency process involving an exchange, its affiliated trading firm and a broad corporate network.

That distinction also limited what could responsibly be concluded on the event date. Reports of regulatory investigations and possible misuse of funds were circulating, but the petition itself did not adjudicate fraud or quantify customer losses. Treating allegations as findings would have exceeded the contemporaneous record.

Markets price counterparty risk

Crypto markets weakened after the filing announcement. In an update timestamped 16:46 UTC on November 11, CoinDesk reported that bitcoin fell about 7% to a 24-hour low of $16,351 during early U.S. trading. Its CoinDesk Market Index, then covering 162 digital assets, was reported down 3.3% over the early-U.S.-hours window. FTT, the exchange-linked token at the center of the week’s confidence crisis, was reported down another 33%.

Those figures are intraday snapshots, not daily closing prices, and they do not isolate the bankruptcy announcement from broader market forces. Even so, the synchronized declines were consistent with traders marking down exchange, liquidity and counterparty risk across digital assets.

The durable significance of November 11 was institutional: a centralized venue that had appeared liquid and influential days earlier was now subject to bankruptcy court. The immediate questions were no longer whether a private buyer would restore confidence, but which entities controlled customer assets, how claims would be classified, and what records the new management could produce.