Crypto exchanges: FTX bankruptcy throws crypto market into chaos
The catastrophic year 2022 for crypto exchanges comes to a turbulent end: The company FTX had to file for bankruptcy, which has potentially far-reaching consequences for the entire industry.
The previously third-largest crypto exchange in the world in terms of volume is bankrupt: As the company FTX announced on Twitter, it is officially insolvent and has filed for bankruptcy and creditor protection under Chapter 11 of the US bankruptcy code. In addition to FTX itself, the bankruptcy also affects the associated brokerage house Alameda Research and 134 other companies associated with the crypto exchange. All of the company’s assets have now been frozen, and the most popular cryptocurrency, Bitcoin itself, has meanwhile fallen below the $16,000 mark for the first time since 2020.
In addition to the bankruptcy announcement, the resignation of the founder and CEO Sam Bankman-Fried was announced, but the originally intended successor has jumped off. The crypto investor Stephen Neal was planned for this position, but he turned it down. It is not known why Neal specifically canceled – the portal TheVerge cites “reasons that have nothing to do with FTX or the previous CEO”.
In addition to the search for a new CEO, FTX has been desperately looking for an investor over the past few days to straighten out the company’s financial difficulties. But instead of a takeover by the competitor Binance, which had been speculated in the meantime, its founder Chanpgeng Zhao also distanced himself and declared Twitterthat the FTX problems are “beyond their abilities” to help.
In the course of the FTX bankruptcy, several details have now come to light that question the future of crypto exchanges. For example, crypto bank BlockFi, which was originally set to be acquired by FTX this summer, Withdrawals of customer funds temporarily stopped altogether. On the other hand, stuck at the brokerage house Genesis according to their own statements $175 million in the FTX exchange whose future is now unclear. For Bankman-Fried, too, the trend is almost straight down: Loud Bloomberg The now-former FTX CEO plummeted from $16 billion in assets earlier in the week to essentially zero — “one of the greatest asset destructions in history,” the portal writes.
In addition, Bankman-Fried secretly moved about ten billion US dollars in customer funds from FTX capital to Alameda Research to solve the liquidity bottleneck. Of these, according to the website Reuters around 1.7 billion US dollars have now disappeared without a trace. Bankman-Fried gave in the wake of a tweet series admitted he “screwed it up” but didn’t go into details about what happened. Just last week, the ex-CEO of FTX had one tweet states that the US arm of the crypto exchange is 100 percent liquid. The American Securities and Exchange Commission (SEC) now has one Investigating the incidents surrounding Bankman-Fried started.
Source: Twitter
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