Crypto exchange FTX files for bankruptcy

Trading platform founder Sam Bankman Fried, who was investigated by the SEC, steps down as CEO
Cryptocurrency exchange FTX announced on its Twitter page that it has filed for bankruptcy. According to the announcement, FTX Trading Ltd., Alameda Research and 130 other affiliated companies have entered voluntary Chapter 11 bankruptcy proceedings. This procedure will allow companies to receive protection from claims from creditors during business reorganization and debt restructuring.

Press Release pic.twitter.com/rgxq3QSBqm








— FTX (@FTX_Official) November 11, 2022
 
 
 
 
 
 





 
 
 
 
 
At the same time, it was announced that Sam Bankman Fried is stepping down as the platform’s CEO. John Ray III has been appointed as the new CEO.














Need up to $8 billion to save business and customer funds

The precipitous collapse of one of the largest crypto exchanges began in early November after a CoinDesk investigation revealed that the majority of FTX-related Alameda’s assets ($14.6 billion) were FTT tokens. It turned out that the giant of the venture capital industry is backed by a coin issued by its own subsidiary, instead of independent assets such as fiat currencies or other well-backed cryptocurrencies.
Following this news, the head of Binance, Changpeng Zhao, announced that his company intends to sell its existing FTT tokens. Immediately after that, the coin rate fell by 23%, followed by a surge in the withdrawal of funds from FTX. Sam Bankman Fried confirmed that about $6 billion in various cryptocurrencies was withdrawn from the platform in just 72 hours.
*The head of Binance spoke about the possible purchase of FTX
 
 
 
 
 





 
 
 
 
 
As a result of the resulting liquidity crisis, Bankman Freed was forced to turn to Zhao for help. The Binance platform was considering buying FTX, but after conducting due diligence and amid news of misuse of customer funds, the largest crypto exchange decided that it would not buy FTX.
FTX CEO Bankman Fried told investors his company could need up to $8 billion to save business and client funds. After Binance refused, he continued to search for a solution and turned to the American crypto exchange Kraken for help, as well as to the founder of the Tron blockchain and one of the leaders of the Huobi exchange, Justin Sun, but did not achieve positive results.
At the same time, on November 10, it became known that Bankman Fried, secretly from other exchange executives, covered Alameda’s losses with funds from FTX clients. He used at least $4 billion from the stock exchange funds for this.







According to interviews with several people close to Bankman-Fried and previously undisclosed communications from both companies, the seeds of FTX’s demise were planted months earlier as a result of errors Bankman Fried made after he intervened to save other crypto firms as the crypto market crashed amid rising interest rates.
 
 
 
 
 





 
 
 
 
 
According to three persons acquainted with the company’s operations, some of those transactions involving Bankman Fried company, Alameda Research, resulted in a string of losses that ultimately proved to be his downfall.
The US Securities and Exchange Commission (SEC) launched an investigation into Sam Bankman Fried, and the Bahamas Securities Commission froze the funds of FTX Digital Markets, which operates the FTX crypto exchange. Also, the issuer of the stablecoin Tether blocked 46 million USDT on her wallet.
“The escape from cryptocurrencies will continue”

All holders of the FTT token cannot count on receiving funds – this is excluded, Artem Deev, head of the analytical department at AMarkets, is sure. He called what happened to FTX “the collapse of another pyramid”, which was held only by the faith of investors in the growth of new digital assets.
 
 
 
 
 





 
 
 
 
 
“The bubble has burst. Due to the problems of this platform, the capitalization of the entire crypto market decreased by 24%, and the panic of investors will further enhance this effect – the escape from cryptocurrencies will continue, ”the expert warned. “We have been warned about this many times. And the largest investors (both private and institutional) have long begun to go into cash, treasuries and gold,” concluded Deev.
ENCRY Foundation co-founder Roman Nekrasov suggested that FTX could now issue some sort of debt token that could be compensated over time. Such a token can act as an IOU that the exchange will try to repay customers.
“For the crypto market, the bankruptcy of FTX is a deterioration in the investment climate, another blow to confidence in the crypto industry and, most likely, a trigger for a further fall, which was already expected due to macroeconomic factors such as high inflation and key rate hikes in the US and Europe. . Well, now it’s not worth waiting for a new bullish cycle until the summer of 2023, ”the specialist predicted.
The bitcoin rate is unlikely to start growing in the next six months, agreed Nikita Zuborev, senior analyst at Bestchange.ru. He added that the companies most affected in one way or another connected with the business of FTX. These are Binance, Coinbase, Robinhood and some other investors or companies serving the crypto exchange business, like Tether and Circle.
 
 
 
 
 





 
 
 
 
 
“FTT holders are likely to get a chance to take their losses at less catastrophic prices after a brief technical correction that could occur in the coming days. However, the forecasts are also negative for the future of FTT holders and clients of the exchange. A miracle is unlikely to happen, all potential “saviors” have denied involvement in the FTX business and do not plan to save the exchange on current terms,”