2022-11-19 15:32:05
What caused the collapse of the FTX exchange?
An event, that shocked all crypto community, had occured this month - the collapse of the 2nd largest crypto exchange in the world. In this post, we will briefly go back in time, try to restore the chronology of events and figure out what led to the bankruptcy of the FTX exchange.
November 2, 2022 — Exclusive from CoinDeskCoinDesk shocks the crypto community with the release of balance sheet data for Alameda Research, owned by Sam Bankman-Fried*. As it turns out, significant funds have been invested in the FTT token of the FTX exchange. It has appeared that Alameda is backed by a coin issued by its subsidiary, and not by independent assets.
*Sam Bankman-Fried is the founder of FTX and Alameda Research.
November 6, 2022 — Tricky move from CZThe founder of the Binance exchange, Changpeng Zhao (CZ), steps in and posts information on Twitter about plans to sell all his FTT tokens. The CEO of Alameda Research is quick to respond and offers to buy the tokens at $22. CZ refuses. This provokes rumors that the goal of the head of Binance was to break FTT.
November 8, 2022 — To buy or not to buy?
The price of the FTT token has fallen below $22. Users report that FTX does not allow withdrawing more than 1,000 USDC in a single transaction. Binance throws a lifeline and announces its intention to buy FTX to protect users, cover the inability to quickly sell assets and pay obligations.
November 9, 2022 — Refusal to buy and market fallAlameda and FTX owner Sam Bankman-Fried's fortune decreases by 93.8% in a day. $6 billion is withdrawn from FTX in 72 hours. The chief analyst at CoinMetrics has concluded that Alameda Research has gone bankrupt back in the 2nd quarter. It had been financed by FTX that kept it afloat.
One more question: is it possible that Binance knew about this scheme and deliberately crashed the market in order to force FTX to face a liquidity crisis?
Binance takes the lifeline and refuses to buy FTX after checking the company's reporting and structure. Bitcoin reacted by dropping below $16,000.
November 10, 2022 — FTX loaned a bitSam Bankman-Fried gives a speech announcing that Alameda Research is ceasing trading and hints that FTX is not the only one in the industry and drops the following phrase: "Well played; you won" (probably addressed to CZ).
FTX loaned Alameda $10 billion in clients' money. After that, a significant part of the amount disappeared.
November 11 — Bankruptcy or Debt Token Issue?Former top manager of FTX has disclosed the financial data of the exchange:
— Liabilities — $8.8 billion
— Liquid assets (USD, JPY, DAI) — $900 million
— Less liquid assets (GBTC, ETHE, SOL) — $2 billion
— Illiquid assets — $3.2 billion
Therefore, FTX has only two options: bankruptcy or debt token issue.
FTX goes bankrupt and Sam Bankman-Fried steps down as CEO.
November 12 — Hackers or fellows?FTX reports that they has been hacked and robbed for $ 383 million. Presumably, the hacker turns out to be former FTX developer Samuel Hyde.
November 13 — How much does FTX still owe?Binance is closing margin and futures trading for the FTX token and Simple Earn products.
As a result, FTX owes more than $5 billion in USD, $1.41 billion in BTC, $800 million in Tether and $670 million in ETH.
+ Unclosed BlockFi, Genesis and LayerZero loans.
And in conclusion, let's move on to the age-old questions: who is to blame for the collapse of FTX and what should investors do? Some blame Changpeng Zhao (CZ), who eliminated a competitor with a couple of tweets, some suggest that the US government is involved, which seeks to impose the need for large-scale control over the crypto market.
We advise investors not to panic, analyze the facts and keep the currency in cold wallets.
And choose the exchange based on the values of its owners: goals, partners, attitude with the team, development vector and worldview, which is backed not by words, but by actions.
Who do you think is to blame for the collapse of FTX?
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