FTX, one of the world’s largest cryptocurrency exchanges, has gone bankrupt, leaving an $8 billion dept hole on its balance sheet. Numerous of its 1 million consumers are currently unable to withdraw their money. The FTX group, which is headquartered in the Bahamas but is managed from offices in America, filed for bankruptcy protection there on Friday 11th November. Let’s unveil the story from beginning to the very end 🔍
What happened to FTX?
Due to FTX’s inability to find investors, Binance withdrew from a possible partnership that would have helped the company. According to recent estimates, the intricate network of over 130 firms from the FTX group may be liable for up to $50 billion in debt.
Who are the main characters?
Sam Bankman-Fried and Changpeng Zhao, sometimes known as SBF and CZ, are two sides of the same crypto currency. They created FTX and Binance, the two biggest digital currency exchanges, in only a few short years 😵💫
Zhao knows
The founder of Binance platform was giving a speech in Lisbon when the news struck on 2nd November. On 6th November, investors were alarmed when Zhao tweeted that “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books”. Its position was estimated to be worth $580 million, or around 5% of the total, prior to the currency meltdown. A few other tweets that were referencing Bankman-Fried as someone “ who lobbies against other industry players behind their backs.” followed some time after.
The situation intensifies
On Monday 7th, Bankman-Fried responded to the weekend turbulence with his own series of tweets, claiming that “A competitor is attempting to go after us with false rumors.” He continued, "FTX is fine. The assets are fine”. The statement, however, didn’t seem to be too truthful since he later requested the help of Binance in another tweet.
Zhao was willing to help at first announcing that a deal was soon to be made. Bankman-Fried confirmed by saying “Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc)”. Everything has just begun to look promising, when the following day Binance changed their mind and stated that “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” clearly saying that FTX can’t seek any help from Binance now 🤷
The story ends
On Friday 11th FTX filed for Chapter 11 bankruptcy protection for the exchange itself as well as its US platform and Alameda. John Ray III, an attorney who assisted with Enron’s liquidation, took over as CEO in lieu of Bankman-Fried. Zhao issued a warning about the cryptocurrency market’s impending catastrophe of 2008 proportions hours before the collapse was officially verified. He stated at a conference in Indonesia that this week’s events were “probably an accurate analogy” to the global financial crisis, according to the Financial Times 😵
We can not be sure about the consequences, however what we know for sure is that the era of FTX has come to its end.
Stay tuned 📻