The bankruptcy of FTX throws the crypto market into chaos

The bankruptcy of FTX throws the crypto market into chaos

from Yusuf Hatic
The cataclysmic year of 2022 for crypto exchanges is coming to a tumultuous end: FTX Company was forced to file for bankruptcy, which could have a major impact on the entire industry.

Previously the third largest crypto exchange in the world in terms of volume has gone bankrupt: As the company FTX announced on Twitter, it is not bankrupt and has filed for bankruptcy and creditor protection under Chapter 11 of the US bankruptcy code. In addition to FTX itself, the bankruptcy also affects the associated brokerage house Alameda Research and 134 other companies related to crypto exchanges. All of the company’s assets are now frozen, and the most popular cryptocurrency, Bitcoin itself, has meanwhile fallen below the $16,000 mark for the first time since 2020.

In addition to the bankruptcy announcement, the resignation of founder and CEO Sam Bankman-Fried was announced, but the previously intended successor has fled. Crypto investor Stephen Neal was lined up for this position, but turned it down. It is unclear why Neal canceled exactly – the gate TheVerge it cites “reasons that have nothing to do with FTX or the former CEO”.

In addition to the search for a new CEO, FTX has been looking for an investor in the past few days to fix the company’s financial problems. But instead of the takeover of competitor Binance, which had been speculated at the same time, its founder Chanpgeng Zhao also distanced himself from the announcement. Twitterthat FTX’s problems are “beyond their ability” to help.

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In the wake of the FTX bankruptcy, several details have now been revealed that question the future of the crypto exchange. For example, crypto bank BlockFi, which was originally set to be acquired by FTX this summer, Withdrawals of customer funds were temporarily suspended. On the other hand, stuck in the brokerage house Genesis according to their own statements $175 million in FTX swaps whose future is now unclear. For Bankman-Fried, too, the direction is almost straight down: Sound Bloomberg The former CEO of FTX dropped from $16 billion in assets earlier in the week to zero – “one of the biggest asset losses in history,” the portal writes.

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In addition, Bankman-Fried secretly transferred approximately US$10 billion in client funds from FTX Capital to Alameda Research to resolve the liquidity constraint. Of these, according to the site Reuters nearly 1.7 billion US dollars are now unaccounted for. Bankman-Fried gave following a a series of tweets he admitted he “analyzed it” but did not go into detail about what happened. Just last week, the former CEO of FTX had one tweet states that the US arm of the crypto exchange is 100 percent liquid. The US Securities and Exchange Commission (SEC) now has one Investigating the events surrounding Bankman-Fried it started.

Source: Twitter