RIP FTX . The company declare Friday cockcrow that they were starting Chapter 11 , AKA reorganizational failure proceeding . In addition , CEO Sam Bankman - Fried ’s other crypto firm , Alameda Research and Weste Realm Shires Services , which is also known as FTX.US , are also tangled up in the proceedings .
The 30 - year - old reckon wunderkind Bankman - Fried , once considered one of the top minds in the crypto sphere of influence , also announce he was vacating his chair as CEO , and that John Ray III is stepping up as head honcho . consort to the prescribed press sacking , “ Many employee of the FTX Group in various country are expected to go forward ” during the bankruptcy proceeding .
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Sam Bankman-Fried announced he was stepping down as CEO from his crypto exchange FTX.Photo: Alex Wong (Getty Images)
— FTX ( @FTX_Official)November 11 , 2022
As of now , most FTX users were still ineffective to draw their cash in hand from the exchange . In the expiration , Ray suppose “ stakeholders should sympathize that event have been fast - moving and the new team is engaged only of late , ” though he did promise every stakeholder they will go forward with “ thoroughness and transparency . ” That ’s probably not much ease for the thousands of FTX users who had gazillion of clam in crypto lay in on the FTX exchange .
How did this all start ? A composition from CoinDesk made it clean-cut that FTX had beeneffectively printing moneyusing its own FTT crypto token to prop up Alameda Research , Bankman - Fried ’s own crypto trading business firm . A Thursday report fromThe Wall Street Journalclarified that FTX had used customer ’s money to fund their own trading endeavour . Of the $ 16 billion customer assets under FTX ’s control , Bankman - Fried reportedly leant half of that amount over to Alameda so it could affiance in high-risk crypto investment funds . Throughout 2022 , Bankman - Fried had been propping up other failing crypto business firm and buy up the plus of failed ventures like Voyager and Celsius .
Once its rival crypto interchange Binance dumped its stock of FTT , the price of the exchange ’s aboriginal coin plummet , resulting in FTX faceplanting into a multi - billion dollar hole that it has not been able-bodied to force itself out of .
It ’s gone from uncollectible to worse for what was once the third - largest crypto interchange by market crown . Late on Thursday , the Bahamas , where FTX was based out of , denote its Securities Commission had freeze all of FTX ’s assets . harmonise to anofficial release , the rural area also suspended the company ’s prescribed registration .
“ The Commission is cognizant of public statement suggesting that customer ’ assets were mishandled , mismanaged and/or transferred to Alameda Research . Based on the Commission ’s entropy , any such actions would have been adverse to normal governance , without customer consent and potentially unlawful , ” the Securities Commission wrote .
Bankman - Fried hasput the blame on his own shoulders , saying “ I fucked up , and should have done better . ” He also said he overestimated the margins for how much users had on FTX . As much as he might be placing the blame on himself , that still wo n’t discontinue the U.S. Department of Justice and The Securities and Exchange Commission frominvestigatingwhether FTX ’s lending products were security , and whether the exchange broke any law .
BlockFi is Caught Up in FTX’s Failure
Just like the collapse of the Terra stablecoin seven months ago , thecalamitybefalling the once - herald crypto exchange FTX is set to take down multiple loss leader of the crypto loaning space . Late on Thursday , crypto lending platform BlockFi announce they were kibosh withdrawals .
The company twinge they were keeping all crypto on their platform “ until there is further pellucidity ” from the on-going collapse ofonce - billionaireSam Bankman - Fried ’s crypto house FTX and Alameda Research . The troupe also begged users to not do any more crypto deposits on their BlockFi wallets until they could somehow , some way , sort out this mess .
“ We , like the rest of the earthly concern , found out about this situation through Twitter , ” the company publish .
pic.twitter.com/zNF1uP6evl
— BlockFi ( @BlockFi)November 11 , 2022
In its second quarter salary report , BlockFi enjoin they had $ 3.9 billion in client assets domiciliate under their roof , though of track the cost of crypto fluctuates so apace it ’s concentrated to assure just how much crypto might be squirreled away . An unidentified informant with knowledge of the issue told Bloomberg that BlockFi was working to move its asset over to FTX for custody , though the majority had n’t yet been transferred . The company had also given loans to Alameda , though the source did not define how much .
Earlier during this ongoing crypto winter , BlockFicut 20 % of its stafffrom all portion of its company . afterward that same month , FTXhanded the exchange $ 250 million in creditto keep itself afloat . At the time , FTX ’s CEO Bankman - Fried tell his ship’s company was “ partnering ” with BlockFi “ so they can voyage the market from a situation of strength . ” In a Twitter ribbon , he further elaborated that BlockFi was dissemble preemptively to gain new Johnny Cash flows “ before it was necessary . ”
A Few Crypto Folks Considered Propping Up FTX
Binance and its chief executive officer Chenpeng Zhao were originally set to buy out FTX , but after wait at its rival ’s balance rag and apparently smell out something not quite right , Binancetanked the deal . Justin Sun , the founder of Tron and its cryptocurrencies such as TRX JUST , then stepped up to potentially prop up the fail troupe . Sun toldBloombergon Friday that they might be ready to provide a multi - billion buck inflow of attention to help the beleaguered FTX .
Sun had alreadystruck a dealwith FTX that allowed its nominal holders to unsay their funds to external notecase , even though the exchange is still ostensibly closed to pulling out . sooner this first light , Tron ’s token were trade at an enormous insurance premium on FTX as users worked to get their item off the sinking ship that is Bankman - Fried ’s prized rally , according to a report fromCoinTelegraph .
Alameda ResearchCryptocurrencySam Bankman - Sam Bankman - FriedUberisation
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