Crypto sell-off resumes as week-long FTX saga ends in bankruptcy filing

Cryptocurrencies resumed their sell-off on Friday morning as FTX announced it has filed for Chapter 11 bankruptcy in the U.S.

Bitcoin fell 4% to $16,877.87, while ether lost 3.5% to $1,256.33, according to Coin Metrics. They’re down 21% and 25%, respectively, for the week.

Sam Bankman-Fried – the CEO of the company that became a so-called white knight for the industry, helping bring crypto to the masses through his relationships with high-profile celebrities, regulators and institutions in addition to his exchange product – has also resigned, according to a statement posted to FTX’s Twitter account Friday.

Investors are still monitoring the fallout of the three-year-old FTX and its sister company, the trading firm Alameda Research, still unclear on the extent of the damage that will spread to the rest of the market.

About 130 additional global companies, including Alameda and FTX U.S., have also begun the bankruptcy process.

FTX was valued at $32 billion during its last funding round. Some of the biggest names in finance — including SoftBank, BlackRock, Tiger Global, Thoma Bravo, Sequoia and Paradigm.

“We are in the midst of another deleveraging event in the crypto ecosystem and it is so far having limited spillover to broader equity markets beyond sentiment, as crypto institutions lent to each other,” Morgan Stanley analyst Sheena Shah said in a note Friday.

“We expect another round of crypto QT” — or what the firm has previously described as the “crypto equivalent of quantitative tightening” — “with creditor exposures revealed in coming weeks,” she added. “These creditors are currently selling crypto assets to cover risks, adding to volatility.”