New York: FTX went from being to bankruptcy court, the third-largest cryptocurrency exchange worldwide, in less than a week.
After experiencing the virtual equivalent of a bank run. The troubled cryptocurrency exchange, short billions of dollars, has filed for bankruptcy. On Friday morning, FTX, its associated hedge fund Alameda Research, and numerous other businesses filed a bankruptcy petition in Delaware.
It announced that Sam Bankman-Fried, the company’s CEO and founder, has resigned. Bankman-Fried, whose recent net worth is estimated at $23 billion. It has long supported Democrats in politics. According to Forbes and Bloomberg, who closely monitor the world’s wealthiest individuals’ net worth, his net worth has vanished.
Bankman-Fried has additional problems. They based the source on knowledge of the circumstances. The Department of Justice Exchange Commission and the Securities is looking into FTX. To see if any criminal activity has taken place activity or securities offenses have occurred. The individual spoke to The Associated Press anonymously because they could not publicly discuss investigation details.
The investigation concentrated on FTX’s potential use of customer deposits to fund wagers at Alameda Research. Brokers must keep client funds separate from other company assets in traditional markets. Regulators have the power to penalize violations.
The cryptocurrency equivalent of a bank run having occurred, FTX decided earlier this week to sell itself to larger rival Binance. Customers left the exchange when they wondered if FTX had enough capital.
The cryptocurrency community had hoped that Binance. The biggest cryptocurrency exchange in the world could save FTX and its depositors. However, after reviewing FTX’s books. Binance realizes that the smaller exchange’s issues are too complex to be resolved. Binance withdrew from the agreement.
With prices collapsing and financial regulators circling, FTX is the most recent of several catastrophes that have rocked the cryptocurrency industry. Additionally, its failure is shaking the crypto sphere like a tsunami.
BlockFi, a cryptocurrency lender, tweeted late on Thursday that the collapse of FTX has prevented it from conducting business as usual and forced it to pause client withdrawals.
BlockFi, saved by Bankman-FTX Fried’s early last summer, said the news left it “shocked and dismayed.” involving FTX and Alameda in a letter posted to its Twitter account late on Thursday.
In its final statement, the company promised that any upcoming updates “will occur less frequently than what our customers and other stakeholders are accustomed to.”
After the letter published, bitcoin fell, losing close to 5%, before increasing above $17,000 overnight. Bitcoin, the first cryptocurrency, had circled $20,000 for months before this week’s disclosure of the FTX’s issues, which briefly caused it to drop to around $15,500.
