What's Happening at Bankrupt Crypto Exchange FTX?

Know all that has happened till now with the FTX exchange. Know the reasons of its crash, what is currently happening, how much has the investigation of authorities progressed and what the future looks like for the people who invested in the exchange.

After undergoing the digital equivalent of a bank run, the exploding cryptocurrency trading business FTX is now short billions of dollars. The exchange, once one of the largest in the world, filed for bankruptcy on November 11, 2022, and its CEO and founder quit. The trading business afterwards stated that there had been "illicit access" and that money had vanished. According to market experts from buidlbee.com, hundreds of millions of cash may have gone. The fall of the once-dominant exchange has sent shockwaves across the industry. So what has happened, and what do we know so far?

Reasons for FTX Declaring Bankruptcy

Customers abandoned the exchange due to concerns over FTX's capital, and it agreed to sell itself to Binance - its rival crypto exchange. However, the transaction fell through owing to Binance's due diligence on FTX's balance sheet. According to its bankruptcy petition, FTX estimated its assets between $10 billion and $50 billion and identified more than 130 associated firms throughout the world.

On Friday (Nov. 11, 2022), FTX and other related entities, including Alameda Research ( CEO Sam Bankman-hedge Fried's fund), filed for bankruptcy in Delaware. This week's events were a startling turn of incidents for Bankman-Fried, who was hailed as a hero earlier this year when he helped shore up a number of bitcoin firms that had run into financial difficulties. He is worth an estimated $23 billion and has been a major political donor to Democrats. He has now been charged with fraud in the crypto exchange's collapse.

FTX verified illegal access to its accounts only a few hours after filing for Chapter 11 bankruptcy protection. On social media, there was a debate about whether the exchange had been hacked or whether a business insider had taken tokens, which BTC analysts couldn't rule out. The exact amount of money involved is unknown, but analytics company Elliptic stated that $477 million was missing from the transaction. According to FTX's new CEO, John Ray III, the company is turning off the ability to trade or withdraw cash and is taking efforts to safeguard consumers' assets.

The Current Situation

The Royal Bahamas Police Force said that it was looking into FTX, adding to the company's troubles. In a statement issued on Nov, 13, the police agency said it was collaborating with Bahamas securities authorities to "examine if any criminal misconduct happened" concerning the exchange, which relocated its headquarters to the Caribbean island last year.

According to a person familiar with the matter who talked to The Associated Press last week on condition of anonymity since they could not discuss details of the investigations publicly. The U.S. Department of the Securities and Justice and Exchange Commission began investigating FTX before the bankruptcy filing and missing funds to find out whether any securities offenses or criminal acts were committed.

The Consequences

Companies who supported FTX are writing down their investments; bitcoin and other digital currency prices have fallen. Politicians and authorities are pressing for more regulation of the complex business. FTX mentioned that it was transferring as many digital assets as it could identify to a new "cold wallet custodian," which is simply a method of holding assets offline without enabling remote control. FTX has also signed into a number of sports-related agreements, some of which have since fallen through.

As a result of the situation, the Miami Heat and Miami-Dade County agreed to end their agreement with FTX and rename the team's arena. Mercedes announced that it would immediately remove FTX badges from its Formula One vehicles. More consequences to come.

Final Say!

This year has seen more than a significant share of unexpected market meltdowns due to surprising news about poorly managed cryptocurrency businesses. The newest seismic disturbance is FTX, the world's fourth-largest crypto exchange, which was considered an industry mainstay until early November. Following a liquidity crisis, FTX, its smaller firm Alameda Research, and 130 connected firms operating under the brand of FTX Group filed for bankruptcy on November 11, according to a corporate statement released on Twitter.

The announcement also stated that FTX CEO Sam Bankman-Fried would step down and be replaced by John J. Ray. On the other hand, he will assist with the transfer. "The temporary respite provided by Chapter 11 is appropriate to allow the FTX Group to review its circumstances and design a plan to optimize recovery for stakeholders," said Ray, the new FTX CEO.


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