Mega crypto exchange FTX and its 30-year-old former billionaire founder Sam Bankman-Fried (SBF) have met their downfall.
FTX’s sudden collapse sent shockwaves across the entire cryptocurrency industry and bled the crypto market capitalisation by over $100 billion within a day. Bitcoin fell as low as $15,625 on 9 November, its lowest level since November 2020. This further spooked investors into a massive sell-off.
The dizzying downward spiral began with a leaked balance sheet from Alameda Research, a trading firm founded by SBF. This quickly raised questions and accelerated the discovery of various bombshell revelations. One of the most shocking exposé was FTX tapping into customer deposits to make risky bets, which set up its implosion.
Here’s a quick run-down of the ongoing saga:
- 2 Nov: A leaked balance sheet from Alameda Research suggested that the trading firm held a lion’s share of FTT – the native token of the FTX cryptocurrency exchange.
- 5 Nov: Twitter account Whale Alert notified its users that approximately 23 million FTX tokens were moved to Binance, sparking fears about an incoming dump.
- 6 Nov: Alameda CEO Caroline Ellison attempted to quell panic, tweeting that the leaked balance sheet was only for “a subset of our corporate entities” and that over $10 billion of other assets weren’t reflected in it.
- 6 Nov: Binance CEO Changpeng “CZ” Zhao announced that his exchange would liquidate all of its FTT holdings due to “recent revelations”.
- 6 Nov: Ellison offered to buy Binance’s FTT holdings for $22 per share.
- 7 Nov: FTX’s $6 billion bank run began as users scrambled to withdraw their assets from FTX.
- 7 Nov: Sam Bankman-Fried attempted to calm the fear, uncertainty and doubt (FUD) with a series of tweets, saying a competitor “is trying to go after us with false rumors” and “assets are fine.”
- 7 Nov: CZ turned down Alameda’s over-the-counter deal to purchase Binance’s FTX Token holdings.
- 8 Nov: FTT price began to take a nose dive. The broader crypto markets also started to waiver.
- 8 Nov: SBF confirmed FTX’s “liquidity crunch” and sought help from Binance. CZ followed up with the announcement saying Binance has signed a non-binding letter of intent to acquire FTX.
- 9 Nov: Websites for FTX’s venture capital arm, FTX Ventures and Alameda, went dark.
- 9 Nov: Binance officially backed out of the acquisition deal, citing the depth of FTX’s crisis to be “beyond our control or ability to help”.
- 9 Nov: Crypto market in a sea of red. Crypto market capitalisation lost over $100 billion in 24 hours after CZ scrapped the FTX bailout deal.
- 9 Nov: FTX website warned against deposits and halted withdrawals.
- 10 Nov: Venture capital firm Sequoia Capital marked down its entire $213.5 million investments in FTX and FTX US to zero.
- 10 Nov: SBF apologised over FTX meltdown.
- 10 Nov: Japan’s financial regulator issued suspension orders to FTX Japan.
- 10 Nov: FTX US resigned from the Crypto Council for Innovation.
- 10 Nov: Bahamian securities regulator suspended FTX’s registration in the country and froze its assets.
- 11 Nov: FTX opened withdrawals for users from the Bahamas. One Bahamian account exploited a loophole to help out users from different domiciles make their withdrawals using NFTs.
- 11 Nov: California regulators to investigate FTX’s collapse.
- 11 Nov: All Alameda Research employees resigned collectively after a group meeting.
- 11 Nov: FTX tweeted that about 130 companies in FTX Group had started proceedings to file for bankruptcy in the US. SBF resigned as CEO and the position is succeeded by John Ray.
- 11 Nov: FTX US suspended withdrawals.
- 12 Nov: FTX suffered $659 million hack from wallet drains.
- 13 Nov: FTX faced an investigation from The Royal Bahamas Police Force for possible criminal misconduct.
- 14 Nov: Turkey’s financial authority announced an investigation against FTX.
- 14 Nov: The Supreme Court of the Bahamas approved provisional liquidators to oversee the assets of FTX’s Bahamian entity FTX Digital Markets.
- 14 Nov: FTX bankruptcy filings revealed that the exchange may have over 1 million creditors.
- 14 Nov: FTX’s downfall under probe by the US attorney’s office in Manhattan, New York.
- 15 Nov: Australia’s financial services regulator suspended the operation licence of FTX’s local entity.
Of course, FTX’s demise is not the end of crypto. But the carnage following its drama has undoubtedly inflicted a grievous wound on the crypto market that may take a long time to recover from. The FTX saga is still ongoing at the time of publication and further developments will be covered in our next crypto round-up.
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