Beset by massive withdrawals of funds, Second largest global encryption platformFTX, has filed for bankruptcy and its CEO and founder, 30-year-old Californian Sam Bankman-Fried, he resigned after apologizing. “Sorry, I should have done better,” said the entrepreneur, who until last week was considered almost an evangelist by cryptocurrency fans on Twitter.
The fall of FTX and the messy departure of Sam Bankman-Fried had scandalous aspects and punished most cryptocurrencies, such as bitcoin, which it has lost more than 20% of its value in the last week.
At press time, it was trading below US$17,000, to the concern of savers and investors. “The worst ending for FTX. Sad and criminal”yesterday tweeted Pierpaolo Barbieri, CEO of Ualá, a fintech that has just enabled its customers to operate with bitcoin and ethereum.
Based in the Bahamas and created in 2019, FTX has been dealing since Monday a liquidity crunch until it crashed scandalously. It is a group with 130 subsidiaries, such as its crypto FTT and investment fund Alameda Research, now suspected of operating in a non-transparent manner.
In fact, FTX has filed for Chapter 11 bankruptcy in the United States (a judicial umbrella) to see how it returns the funds of approximately 1 million users. Chapter 11 allows businesses make a plan to reorganize and stay in business while working to pay off the debtyes Something similar to the preventive competition in Argentina.
Before the crash and as of last week, Sam Bankman-Fried had a fortune estimated at $15 billion. FTX rivaled the world’s largest Binance, which played a key role in the fall. In the midst of the rush, the company announced its interest in buying it and hours later shut it down. Unusually, the crisis erupted when Binance CEO Changpeng Zhao announced the sale of all of his FTTs (for US$529 million) due to a possible FTX insolvency.
In place of Bankman-Fried John J Ray III took over as CEO. In a statement, Ray said that “FTX Group has valuable assets that can only be managed effectively in an organized joint process.” The extent of that decline is still unknown, but the losses are estimated to be substantial. Not only from savers but also from powerful funds such as Softbank and Sequoia, among others.
FTX lent the money to its investment firm, Alameda Research, which used it in aggressive trades, and now owes the platform an estimated $10 billion, according to a Wall Street Journal report. “I want to assure this to all employees, customers, creditors, any contractors, investors, administrative authorities and others we will make a diligent, thorough and transparent effortRay promised.
Amidst the turmoil, BlockFi, a well-known cryptocurrency lending platform in the market, announced yesterday that it was stopping withdrawals of funds. “We are shocked and dismayed by the news about FTX and Alameda,” BlockFi said on Twitter in justification. The company noted that until there is “greater clarity, we are limiting activity on the platform.” including the “cryptoopen”.
Source: Clarin
