FTX bankrupt: Who's to blame?
After facing the digital equivalent of a bank run, the imploding crypto trading business is now in the red by billions of dollars. FTX, one of the biggest exchanges in the world, filed for bankruptcy last week. Its CEO and founder also resigned. The trading firm afterward stated that there had been "unauthorised access" and that cash had vanished.
According to analysts, hundreds of millions in cash may have gone. Elliptic, an analytics firm, estimated on Saturday that $477 million was missing from the transaction. On social media, there was a debate about whether the exchange was hacked or whether a business insider had taken assets, which cryptocurrency analysts couldn't rule out.
Its new CEO, John Ray III, announced that it would disable the ability to trade or withdraw cash and would take actions to safeguard consumers' assets.
FTX Bankrupt: How did it happen?
Customers abandoned the exchange due to concerns over its funds and agreed a sale to rival crypto exchange Binance. However, the transaction fell through while Binance conducted due diligence on FTX's balance sheet.
According to its bankruptcy petition, the crypto business estimated its assets at between $10 billion and $50 billion and identified more than 130 associated firms worldwide.
On Friday, FTX and hundreds of linked entities, including founder Sam Bankman-Fried's hedgefund Alameda Research, filed for bankruptcy in Delaware.
FTX Bankrupt: Bankman-Fried accepts blame
Sam Bankman-Fried apologised on Twitter Thursday morning, saying he "f—-ed up" and should have done better. Bankman-Fried also announced the closure of Alameda Research, the trading business he co-founded with FTX.
The tweet comes as the former crypto industry star pleads for billions of dollars to avoid bankruptcy.
This week has been a rapid fall from grace for FTX. After valuing the exchange at $32 billion earlier this year, Bankman-Fried is now searching for someone to backstop the crypto business after rival exchange Binance withdrew from a plan to purchase it.
He is worth an estimated $23 billion and has been a major political donor to Democrats.
Author: Emmanuel Baiden
7 years experience within the financial services sector most notably in Sales, Trading, research and writing articles within the crypto space. I have a bachelor's degree in International Business and a Master's in Investment and Risk Finance . I am also an associate member of the Chartered Institute for Securities and Investment.