After a series of recent cyberattacks, FTX, one of the largest cryptocurrency exchanges in the world, has filed for bankruptcy protection. Along with this record, FTX also announced that it will close its doors on Friday.
Sam Bankman-Fried resigned as chief executive of FTX and the company filed for bankruptcy protection. FTX is a real estate and capital markets company founded by Sam Bankman-Fried in 2014. In 2017, FTX reported having $1.2 billion in assets and $1.8 billion in liabilities. The statement issued by FTX mentioned a number of related businesses, including its North American exchange and Alameda Research.
Bankman-Fried has filed for Chapter 11 bankruptcy in the US and is now reviewing assets and reorganizing everything to make sure everyone is taken care of. Included in the group of companies listed in FTX’s bankruptcy filing was an extensive network of companies, grouped into subsidiaries and contractual arrangements. In addition to Ban, the company claimed that about 130 other businessmen were included in its lawsuit.
CNBC reports that FTX has more than 100,000 creditors, worth a total of $250 billion. The company also has debt of more than $100 billion and only has assets of about $50 billion, putting its present value at about 1/10th of its liabilities. FTX trading has been strong so far this year and is currently on the upswing in the industry, according to CoinGecko, leading the top five exchanges.
The business thread revealed that Bankman-Fried, 30, has resigned as CEO and will be replaced by John J Ray III. He is an American attorney who oversaw the liquidation of the company in 2004. “I’m getting the game in order and will be writing a full post about it soon, but I wanted to make sure to say that last Friday’s game was shocking,” Bankman-Fried tweeted on Friday.
Loss of equity
Bankman-Fried lost $16 billion, and as of Friday, his net worth was 1/3 of what it was. FEXX’s subsidiary in the Bahamas was frozen Thursday. He doesn’t say why, but he has already frozen FTX Digital Markets and related party assets, as well as naming individuals involved in these financial transactions.
It seems that Friday was not the best night for crypto traders. Many investors panicked as trading platforms closed their doors for fear of losing market access. BlockFi needed liquidity when it borrowed $250 million from FTX in less than a week. They didn’t foresee this, so they had to borrow the additional $500 million just days later.
BlockFi says this caused operational problems for the company, but it hasn’t been able to do so normally. Bitcoin, the top cryptocurrency, dropped as much as 7% to $16,361 on the news of bankruptcy this week. The news that the cryptocurrency market is trading has caused a slowdown for Bitcoin and other currencies today.
Changpeng Zhao, founder of rival exchange Binance, mentioned on Friday that the cryptocurrency market is facing a 2008-style crisis with more failures to come.
The 2008 financial crisis was undoubtedly one of the worst economic events in recent history. It seems that the 2008 financial crisis is an accurate analogy for what is happening with the FTX. In fact, FTX has struggled with profitability and cash flow since late 2015. This week’s events contributed to the collapse of the crypto economy, Alexander said.
Largest cryptocurrency exchange in the world
Binance, a well-known cryptocurrency exchange, released a statement on Sunday that it was selling $6 billion in FTT holdings. This caused an extensive bank-style run as people rushed to withdraw their legitimate money. As the company was under attack, FTX was receiving takedown requests. This created friction in the industry that led Kim Dotcom, founder of Megaupload, to share a text message from attorney Ira Rothken.
FTX allegedly failed to stop US clients from trading on its offshore exchange. Most people are aware that in some cases unregulated exchanges can be unsafe. However, in a statement on Thursday, Bankman-Fried said the US branch of FTX was not affected because its funds were stored abroad.
That’s all about the international FTX exchange outside the US. US FTX users are fine, but international users are in trouble, so they need to be warned that they risk losing their deposits.
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