Further details emerge on FTX bankruptcy

Further details on the bankruptcy of crypto exchange FTX has emerged, even as peers and partners distanced themselves from the firm and sources have told Reuters at least a billion dollars of customer funds on the exchange has vanished.

The saga that has shaken the crypto world began with a rumour on November 2 and culminated on Friday with FTX filing for US bankruptcy court protection from creditors and founder Sam Bankman-Fried resigning as chief executive in the industry's highest-profile collapse.

The distressed crypto trading platform had struggled to raise billions to stave off bankruptcy as traders rushed to withdraw $US6 billion ($A8.9 billion) from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal this week.

FTX, affiliated crypto trading firm Alameda Research and about 130 of its other companies have commenced voluntary Chapter 11 bankruptcy proceedings in Delaware, FTX said on Friday in a statement on Twitter.

FTX later said subsidiaries LedgerX LLC, FTX Digital Markets, FTX Australia Pte Ltd, FTX Capital Markets, Embed Financial Technologies and Embed Clearing were not included in the Chapter 11 filings.

People familiar with the matter told Reuters at least $US1b of customer funds had vanished from FTX.

Bankman-Fried secretly transferred $US10b of customer funds from FTX to Alameda, they said. A large portion of that has since disappeared, they said, with one source put the missing amount at about $US1.7b and another estimating the gap was between $US1 billion and $US2b.

The nine days of turmoil hit already-struggling cryptocurrency markets, sending bitcoin to two-year lows . Bitcoin dropped after FTX's announcement and is down 18 per cent this month, at $US16,818 on Saturday.

Shares of cryptocurrency and blockchain-related firms have declined. FTX's token FTT plunged 30 per cent on Friday, bringing its collapse this month to 91 per cent.

"Things will continue to simmer after the FTX crash," said Alan Wong, operations manager of Hong Kong Digital Asset Exchange.

"With a gap of $US8b between liabilities and assets, when FTX is insolvent, it will trigger a domino effect, which will lead to a series of investors related to FTX going bankrupt or being forced to sell assets. In an illiquid bear market, the event will lead to a new round of cryptocurrency declines, as well as a liquidation of leverage."

It was an abrupt fall from grace for a company that was once a darling of the crypto industry. FTX raised $US400 million from investors in January, valuing the company at $US32b.

Bankman-Fried, 30, known for his shorts and T-shirt attire, has morphed from being the poster child of crypto's successes to the protagonist of the industry's highest-profile crash.

In its bankruptcy petition, FTX Trading said it has $US10b to $US50b in assets, $US10b to $US50b in liabilities, and more than 100,000 creditors. John J Ray III, a restructuring expert, has been appointed to take over as CEO.

Cryptocurrency exchange Coinbase Global will write off the investment its ventures arm made in FTX in 2021, according to a person familiar with the matter.

US video game retailer GameStop Corp said it was winding down its gift card marketing partnership with FTX US and providing full refunds to customers.

Bankrupt crypto lender Celsius said it had some Serum tokens on FTX, most of which were locked, as well as some $US13m in loans to Alameda.

"We believe cryptocurrency markets remain too small and too siloed to cause contagion in financial markets, with an $US890b market cap in comparison to US equity's $US41 trillion," Citi analysts wrote.