FTX’s Saga – What Became Of The Crypto Exchange?
Recent events with the FTX.com exchange clearly indicate that even the largest crypto exchanges can fall if not managed appropriately. The company filed for bankruptcy on the 11th of November, but the big question is why? What went wrong?
Simply said, the owner thought he could abuse clients’ funds without any consequences. When asked about it, he said he was unaware that the funds didn’t belong to him. If you were looking for the world’s lamest excuse, we found it right there.
However, we’ll explain in plain English what happened with FTX.com and how you can protect your rights.
What is FTX and Why Did It Go Bankrupt?
FTX was a reputable crypto exchange, or so we thought. The company has dozens of offices around the globe and over 130 affiliated companies. It was the first exchange to obtain a license from the newly established UAE regulatory body for virtual assets – VARA.
It was founded in 2019 in the Bahamas and Antigua and Barbuda. From its small offshore branch, it expanded its services to the EU, Australia, the UAE, and the US, through its affiliated companies. The most prominent offices of this enormous corporation are in Miami and Chicago.
So, how does one such company stay with no money?
Everything started with the CoinDesk report on Alameda Research, a crypto hedge fund co-founded by Sam Bankman-Fried, who’s also the CEO of FTX.com. According to it, the balance sheet of this firm didn’t look good as the vast majority of funds, namely, a bit over $5 billion worth of FTT, is the collateral.
As a native token, FTT’s value is directly dependent on the value of the FTX exchange. If one goes down, it draws the other. Since FTT had no value other than FTX’s promises to buy it for $22 per coin, traders were worried for a good reason.
Not long after the report, Binance CEO Changpeng Zhao, also one of the investors at FTX, announced that he was about to sell his FTT tokens. From there, it all turned into an unstoppable snowball.
Binance suggested purchasing FTX and helping with liquidity issues caused by the panic selling of FTT and its decreased value. After doing due diligence and uncovering an ongoing investigation against Sam Bankman-Fried and the FTX, Zhao backed out, leaving FTX to sink.
What Are the Next Steps For FTX.com?
Well, Sam Bankman-Fried tried to delude investors about the alleged solvency at first. And when that didn’t work, he apologized for his mistakes, saying that the company needed $4 billion to stay solvent.
According to reports on related companies, FTX loaned $10 billion of customers’ funds to Alameda Research to gamble with them. And this was the beginning of the end.
Currently, there’s an investigation by SEC and CFTC on both SBF and his companies, including FTX, FTX.US, and Alameda Research. The US authorities requested Tether to block $46 million worth of USDT that belongs to the FTX exchange, pending investigation.
Since Alameda Research and FTX are separate businesses, the leaked information from the CoinDesk report caused major market disruption. In the first place, it’s clear that clients’ funds have gone from the FTX account to Alameda Research. What’s more concerning, these funds were then used for investing and personal gains by those running the two firms.
Logically, the next step is a trial based on the evidence the authorities will collect.
How Did FTX’s Situation Affect Crypto Market?
Since the information leaked, the entire crypto market has plummeted. And for a good reason. Investors’ trust has been disrupted, and it’s a big question if we will ever recover from this significant hit. What happened with FTX can easily compare with any bank filing for bankruptcy and owing clients millions of dollars.
FTT’s price fell by about 80% since the report, causing SBF to become the quickest-losing billionaire in history. According to Bloomberg Billionaires Index, his wealth plummeted 94% in a single day.
Ethereum and Bitcoin also felt the hit, losing around 20% of value upon the news becoming viral. Smaller tokens decreased in value as well, feeling this crash slightly less.
We also recommend not investing in unreliable brokers like MorganFinance, EuroInvestec and DolfinIndex! Always check a firm for a license and its background, dealing in online trading, before investing!
How Did FTX’s Situation Affect Investors?
According to reports, FTX has over 100,000 creditors and valued its assets between $10 and $50 billion. According to flight radar, the owner has fled to Argentina, where his private jet was spotted leaving the Bahamas and going to this safe haven. Since one of the FTX’s first offices is in the Bahamas and holds a license from the Securities Commission, we believe SBF won’t be able to avoid justice.
Reportedly, the SC of the Bahamas already froze all his assets, preventing further abuse. But all this has significantly impacted the investors. Currently, there are no withdrawals from the website, meaning that even those who want their funds back cannot get them.
There is some good news if you have any issues with the FTX exchange. The company holds several regulations, as follows:
- FTX Digital Markets Ltd – licensed by the Securities Commission of the Bahamas
- Zubr Exchange Limited – licensed by the Gibraltar Financial Services Commission
- FTX Express Pty Ltd and FTX Australia Pty Ltd – licensed by AUSTRAC and ASIC, respectively
- K-DNA Financial Services Ltd – licensed by CySEC
- FTX Switzerland GmbH – FINOS and German license
- DAAG Trading, DMCC, and FTX Exchange FZE – licensed by VARA UAE
- FTX Japan Corporation – licensed by JFSA
- Quoine Pte Ltd – granted an exception from holding a license in Singapore
- OVEX FSP (Proprietary) Limited – authorized FSP in South Africa
- FTS.US – authorized in the US
Your story matters, so share it now! If you’ve been dealing with any of the aforementioned entities, you can file a request for reimbursement with the local regulator. Our experts will gladly assist with the issue and help you get your money back.