The new management of FTX is taking steps to [recover political donations](https://decrypt.co/120637/ftx-demands-return-political-donations) made by its former executives, including Sam Bankman-Fried, as part of the ongoing bankruptcy proceedings and plans to recover funds to repay the crypto exchange's creditors. 

## FTX funds donations to political parties

Bankman-Fried had been open about his political donations even before the exchange [collapsed](/news/article/is-crypto-dead). He was the second-largest CEO contributor to Joe Biden's 2020 campaign with a donation of $5.2 million. He also admitted to being a significant donor to Democratic and Republican candidates during the November midterm elections. 

The FTX funds donations to political parties are under [investigation](/news/article/ftx-exchange-under-investigation) by US prosecutors, with court documents filed in January indicating a review of donations totalling $93 million between March 2020 and November 2022.

## FTX plans to take back its political donations

FTX is taking action to retrieve millions of dollars from political contributions. John John Jay Ray III, the newly appointed company's CEO, has issued a formal demand for the return of "contributions or other payments" by 28 February.

The new management has outlined a pathway for politicians and political groups to voluntarily return the funds, with unreturned donations then required to be repaid with interest. 

Additionally, the company emphasized that it will still seek to recover funds donated to third parties like charities. The company clarified that recipients of such contributions are not exempt from its demand for return.

According to recent data from Unusual Whales, 196 members of Congress received campaign contributions from FTX's former executives, including [Ryan Salame](/news/article/ryan-salame-exposed-ftx-truth), Sam Bankman-Fried, Nishad Singh, and others.

In addition to recovering political donations, FTX's new team is also taking steps to repay its creditors, including plans to sell $4.6 billion in non-strategic investments, such as subsidiaries LedgerX, FTX Japan, Embed, and FTX Europe. 

A task force has also been formed by the Southern District of New York US Attorney's Office to investigate the exchange's collapse, including recovering missing customer funds and handling prosecutions relating to the FTX crash.


red image of ftx logo and dollars falling

FTX Funds: Political Donations to be Recovered

The lawyers for the bankrupt crypto exchange FTX filed a creditor matrix in the [Bankruptcy Court](https://www.deb.uscourts.gov/) of the US in Delaware District on 25 January. It is a detailed document that reveals all FTX creditors, including giants like Netflix, Amazon, Apple, and Coinbase.

The court document suggests that the fall of the [FTX crypto exchange](https://ftx.com/) has affected firms from various domains. Besides crypto firms, the collapse has troubled several banks, hotels, airlines, media agencies, charity organisations, and others. In addition, a few government entities are among its creditors.

## Big names from the list of FTX creditors

The creditor matrix is a 115-page document that provides names and mailing addresses of creditors in alphabetical order.

It illustrates the extent of damage caused by the fall of FTX.

As per the document, the bankruptcy of crypto exchanges left a deep impact on the tech industry. The SBF firm is indebted to the tech giants like Apple, Amazon, Microsoft, Meta, Twitter, Google, Netflix, LinkedIn, and many others. 

In addition, media outlets, including big players like the New York Times, figure among its creditors.

In the Web3 sphere, the firm owes to companies like Coinbase, Yuga Labs, Galaxy Digital, Bittrex, Circle, Binance, and Chainalysis.

## FTX bankruptcy case

Not long ago, the FTX exchange was one of the largest in the industry. However, in November 2022, the firm experienced a liquidity crunch as its FTT token crashed.

This prompted the firm to file for insolvency, and its founder [SBF was arrested](/news/article/former-ftx-ceo-sbf-arrested) for financial laws violation. 

Earlier, the firm's lawyers mentioned that it owes money to more than a million creditors. The rough estimates suggest that the firm owes more than $100 million to each of its top ten creditors. However, the recent creditor matrix did not provide the estimated amounts of each creditor.


red image of blockchain with FTX, coinbase, apple and netflix logos shown

FTX Creditors Include Google, Apple, Netflix

On 17 January, cryptocurrency exchange [FTX](/news/article/curve-finance-leverage-ftx-crash) revealed in a report to creditors that a significant amount of funds, estimated at $415 million, were stolen in a series of hacks. 

The company stated that despite efforts to recover lost assets, significant shortfalls remain at the FTX US and international exchanges.

FTX told the bankruptcy judge in Delaware last week that it has managed to [recover more than $5B](/news/article/ftx-news-assets-recovered) in various assets, including crypto, cash, and liquid securities. However, the exchange attributes a portion of the remaining shortfall to the hacks, reporting that $323M in crypto was stolen from the international exchange and $90M from the US exchange since filing for bankruptcy on 11 November.

The company's founder Sam Bankman-Fried has since challenged aspects of the report in a [blog post](https://sambf.substack.com/p/ftx-us-balance-update-2023-01-17) that provides information on the assets that FTX US holds. He has been [accused](/news/article/ryan-salame-exposed-ftx-truth) of using customer funds to cover the debts incurred of his crypto-focused hedge fund, Alameda Research.

Bankman-Fried contested FTX's recent financial report. He claimed that an "extremely misleading" impression of the company's finances had been presented by FTX lawyers at Sullivan & Cromwell. An S&C spokesperson declined to comment on the statement. According to SBF's "best guess," the company still has enough funds to repay US customers, whom he estimates are owed between $181M and $497M.

Attorneys at the firm stated in a recent court filing that they had rejected efforts by SBF to remain involved in the company's bankruptcy proceedings. Also, he has been denied access to the company’s records since stepping down as CEO in November.

## FTX's recovery report

The company neither provided an estimate of the amount owed to FTX US or international customers nor responded to SBF's blog post.

In a recent FTX update on its recovery efforts following the $415M hack, the company reported that it had recovered $1.7B in cash, $3.5B in liquid cryptocurrency, and $300M in liquid securities.

The crypto assets recovered to date include $685 million in Solana, $529 million in FTX's proprietary FTT token, and $268 million in Bitcoin, based on the crypto prices on 11 November, 2022.


Red image of hacker hacking. Dollars falling from sky and Sam Bankman-Fried smiling in foreground

FTX US Reports $415 million Hacked

The [latest FTX news](/news/tag/ftx) could be positive for customers, investors, and lenders – $5B of assets, such as liquid cryptocurrency, liquid investment securities, and cash, have been recovered, according to Andy Dietderich, an FTX attorney.

Dietderich revealed this information to Judge John Dorsey in a Delaware bankruptcy court. The recovered assets do not include those confiscated by the Securities Commission of the Bahamas – where the crypto exchange is headquartered and former FTX boss Sam Bankman-Fried (SBF) was located at the time of his arrest.

## FTX news: who has been named in court filings?

Celebrities such as American football legend Tom Brady, Brazilian fashion model Giselle Bündchen (Brady's former wife), and CEO of the Kraft Group, Robert Kraft, were among those named in the hearings.

Most of FTX's investors and customers facing unfortunate losses have not been mentioned in court filings. At the time of writing, an estimated $8B of customer funds is missing (factoring in the latest recovered funds).

## FTX news: a timeline of events

Here is a timeline of events involving the cryptocurrency exchange and SBF:

•	On 11 November, 2022, FTX, valued at $32B just a year ago, [filed for bankruptcy](/news/article/ftx-bankrupt-who-to-blame).

•	On 12 December, 2022, [SBF was arrested](/news/article/former-ftx-ceo-sbf-arrested) in the Bahamas and extradited to the US.

•	On 13 December, 2022, US federal prosecutors announced eight criminal charges against SBF, including campaign finance violations, money laundering, and wire fraud. This includes allegations of using customer funds to settle debts at his crypto trading firm, Alameda Research, and indulging in other investments.

•	Co-founder of FTX Gary Wang and former head of Alameda Research Caroline Ellison (SBF's rumoured ex-girlfriend) have also been charged [over their purported role](/news/article/sam-bankman-fried-crypto-execs-admit-fraud) in FTX’s calamitous downfall.

•	On 22 December, 2022, SBF was released on a $250M bail bond – one of the largest in US history.

•	SBF, who was [once worth $26B](https://news.yahoo.com/sbf-once-worth-26-billion-092740219.html), pleaded ‘not guilty’ to each criminal charge against him.

In an interview with BBC news before his arrest, Sam Bankman-Fried claimed he had "unknowingly" committed fraud. He did not want the events that unfolded to happen and admitted to being "not nearly as competent" as he thought.


ftx logo on red background with billions of dollars falling from the sky

FTX News: $5B of Assets Recovered

Two top officials of Sam Bankman-Fried's cryptocurrency empire have admitted to committing fraud. [The Southern District of New York US Attorney announced on Wednesday night](https://www.nytimes.com/2022/12/21/technology/ftx-fraud-guilty-pleas.html) that two former employees of Sam Bankman-Fried crypto businesses had pled guilty to federal criminal fraud charges and are collaborating in prosecuting the disgraced crypto entrepreneur.

Gary Wang, 29, founded the exchange FTX, and Caroline Ellison, 28, ran the cryptocurrency hedge fund Alameda Research. They played pivotal roles in the development of the global Sam Bankman-Fried crypto empire, which he launched with the creation of Alameda and FTX.

Following last week's fraud complaints against Mr. Bankman-Fried, two federal regulatory agencies, the Commodity Futures Trading Commission and the SEC (Securities and Exchange Commission), filed civil fraud charges against Mr. Wang and Ms. Ellison and Mr. Wang on Wednesday.

## Facing further legal trouble as former employees plead guilty to fraud

[Mr. Bankman-Fried is in detention](/news/article/former-ftx-ceo-sbf-arrested) in the Bahamas after agreeing to be extradited to face trial in the US. The 30-year-old is in an especially precarious legal position due to the criminal and civil allegations leveled against the former top executives.

The US Government has accused him of perpetrating a massive fraud lasting for years that led to FTX filing for bankruptcy last month.

Two of his closest advisors are now helping federal prosecutors with their investigation. The friendship between Mr. Bankman-Fried and Mr. Wang and Ms. Ellison extended beyond that of close colleagues. He lived with them in a lavish condominium on Paradise Island, the Bahamas, where FTX was headquartered.

Prosecutors and regulators have filed charges against Mr. Bankman-Fried, alleging that he misappropriated billions of dollars from his customers to fund his activities. These include purchasing real estate in the Bahamas, trading cryptocurrencies at Alameda, funding political campaigns, and investing in other cryptocurrency companies. They say he bilked crypto trading company clients, financiers, and lenders.


Sam Bankman-Fried's Crypto Execs Admit Fraud

Sam Bankman-Fried, the detained founder of the bankrupt crypto exchange FTX, reportedly signed documents on 20 December that will see SBF handed over to Federal Bureau of Investigation (FBI) agents and taken to the United States, where he will face criminal charges.

Bankman-Fried was [reported](https://cointelegraph.com/news/sbf-signs-extradition-papers-set-to-return-to-face-charges-in-the-us) to have agreed to be [extradited](/news/article/former-ftx-ceo-sbf-arrested) to the US just hours after his lawyer told a judge in the Bahamas that he was not ready to consent.

## SBF is to be taken to the US to face criminal charges

According to Bahamas Acting Commissioner of Corrections Doan Cleare, Bankman-Fried signed his surrender documents on Tuesday. Today, SBF will sign separate papers finalising his waiver of rights to fight extradition at the Magistrate's Court in Nassau.
[Bankman-Fried](/news/article/sam-bankman-fried-lost-billions) is expected to be accompanied by FBI agents on a private flight back to the US, where he faces eight counts in an accusation by the US Attorney for the Southern District of New York. 

According to the [New York Times](https://www.nytimes.com/2022/12/20/technology/sam-bankman-fried-bail.html), Bankman-Fried's legal team is negotiating with federal prosecutors to allow him to be released on bail if he is extradited to the US.

According to sources, the agreement, which requires the approval of the federal judge overseeing the SBF case, could include highly restrictive conditions such as home custody and electronic monitoring.

## Allegations on SBF 

The Department of Justice has accused SBF of campaign finance violations, commodities and securities fraud, conspiracy to commit wire and money laundering, and wire fraud.

If found guilty of all charges, he could face up to 115 years in prison.

[The Commodity Futures Trading Commission and SEC (Securities and Exchange Commission) have filed additional charges](/news/article/ftx-boss-denied-bail-in-bahamas) against the founder of FTX for allegedly breaking commodity laws and defrauding investors.

After three years of rapid growth, FTX and numerous related companies filed for bankruptcy last month. The exchange was worth US$32 billion at its peak.

Authorities in the Bahamas and the US continue to investigate the involvement of SBF in FTX's collapse last month. The exchange was headquartered in the Bahamas.



SBF Agrees to Return to US to Face Fraud Charges

According to recent reports, authorities were alerted of the FTX's fraud before it made headlines. [Co-CEO Ryan Salame alerted Bahamian authorities](https://cointelegraph.com/news/ftx-bahamas-co-ceo-ryan-salame-blew-the-whistle-on-ftx-and-sam-bankman-fried) a few days before FTX filed for [bankruptcy](/news/article/ftx-bankrupt-who-to-blame) in November.

He alleged that founder Sam Bankman-Fried might have defrauded investors by [transferring money](https://cointelegraph.com/news/alameda-had-unfair-trading-advantage-special-access-to-ftx-funds-cftc-filing) to his sister company, Alameda Research.

## Ryan Salame takes on FTX and Sam Bankman-Fried

Contrary to the vast majority of market rumours, one of the company's top executives, not Changpeng Zhao (CZ) of Binance, was the one who brought down SBF and FTX. The declaration made on Wednesday is the first time an insider's turn against Bankman-Fried has been acknowledged publicly.

According to Bahamian court documents filed on 14 December, Ryan Salame, the former co-CEO of FTX Digital Markets (FDM), informed the SCB (Securities Commission of the Bahamas) on 9 November that the company was sending client funds to its sister trading company Alameda Research.

Salame claimed that the transfer was neither authorised nor approved by clients and that the money was intended to compensate for Alameda's financial losses. Furthermore, he disclosed to the SCB that only three people had the authority to transfer client assets to Alameda: the engineer Nishad Singh, the former CEO Sam Bankman-Fried, and Zixiao “Gary” Wang, the other co-founder of the company.

Salame claimed that he informed Bankman-Fried and Alameda executives that it was against "normal corporate governance" for client funds to have been mixed with Alameda's.

Following that, Christina Rolle, executive director of the SCB, requested an [investigation](/news/article/ftx-exchange-under-investigation) from the commissioner of the Royal Bahamas Police Force because the information “may have held misappropriation, theft, fraud, or some other crime".

The following day, 10 November, the [SCB froze FDM's assets](https://cointelegraph.com/news/bahamas-securities-regulator-freezes-ftx-assets) and suspended its registration in the country. A provisional liquidator was appointed by the Bahamian Supreme Court to try to save the company's assets.
According to the filings, Salame is believed to be in Washington, DC, and has not spoken publicly since the exchange's downfall.

His most recent public tweet was on 7 November, when he responded "lol" to Binance co-founder Yi He after He explained why the exchange [sold its FTX Token FTT holdings](/news/article/ftx-vs-binance-liquidate-funds).

## The collapse of FTX has had an absurd impact on the industry

Mixing SBF's companies' funds was a significant issue in the FTX scandal. In recent weeks, another former executive from FTX's affiliated companies is thought to have been assisting authorities.

On 4 December, images purportedly showing Alameda CEO Caroline Ellison in a coffee shop near the US Attorney's Office fueled rumours. Following the company crash, the cryptocurrency community believes she may have made a deal with authorities. 

Bankman-Fried is, to date, the only person charged in connection with FTX and Alameda so far. He is [accused](/news/article/ftx-boss-denied-bail-in-bahamas) of money laundering, political campaign finance violations, and wire and securities fraud.

Bankman-Fried, Wang, Singh, and Ellison are said to have run a "wirefraud" group chat on Signal, the encrypted messaging app, to send sensitive information about FTX and Alameda's operations. Bankman-Fried denied any knowledge of or participation in the group.


red image of ftx logo on mobile phone. Ryan Salame sitting in foreground. 

Co-CEO Ryan Salame Exposes FTX Truth

A [judge in the Bahamas has refused bail for Sam Bankman-Fried](https://www.bbc.com/news/technology-63967010.amp), the founder and former boss of the bankrupt crypto exchange FTX. According to the most recent sources, he will be detained by Bahamian authorities following his [arrest](/news/article/former-ftx-ceo-sbf-arrested) on 12 December, 2022.

Joyann Ferguson-Pratt, the judge in the case, has scheduled an extradition hearing for 8 February, 2023. The hearing was arranged in response to the decision to deny the former FTX boss bail.

## Ex-FTX boss in court

During the hearing, the attorney for the former FTX boss asked the judge whether SBF might be released on a $250,000 bond. The lawyer argued that his release is required since he requires daily medication.

Prosecutors in the Bahamas resisted the proposal, claiming it violated a treaty with the United States. The attorneys also stated that defendants should be imprisoned while extradition procedures were underway under the treaty provisions.

Bankman-Fried notified the judge that he would not forgo his right to contest the extradition. He then hinted that he could desire to stay in the Bahamas on purpose.

Bankman-Friend, wearing a blue suit without a tie, dropped his head and hugged his parents when the judge ruled that his danger of flight was "very severe". The judge ordered him to be detained in the Bahamas until 8 February.

## Allegations on FTX boss

After the Royal Bahamas Police was informed of a secret indictment by US prosecutors, they arrested SBF on Monday. The arrest was sparked by an unsealed indictment which included eight charges against SBF. These included conspiracy and wire fraud, for allegedly abusing billions of dollars in client payments before his cryptocurrency empire's stunning collapse last month.

Furthermore, the [SEC](/news/article/sec-crypto-enforcement-warning), CFTC, and the US Department of Justice filed complaints against Bankman-Fried on Tuesday for suspected securities and commodities fraud. Bahamas government officials are conducting civil and criminal investigations against him and FTX.

The day's events concluded a remarkable fall from grace for SBF, who created a fortune worth more than $20 billion as he rode a cryptocurrency boom to grow FTX into one of the world's largest exchanges.


red image of bankman fried in front of image of man in handcuffs. 

Former FTX Boss Denied Bail in the Bahamas

The founder and disgraced CEO of the failed crypto exchange FTX, Sam Bankman-Fried, was arrested on Monday after the US Government filed a criminal indictment.

These charges follow weeks of speculation that the FTX CEO misused customer funds.

## FTX CEO arrested

Sam Bankman-Fried, popularly known as SBF, was arrested by the Royal Bahamas Police Force. The police said that the arrest was initiated following receipt of formal notification from the US Government that it filed criminal charges and is likely to request that SBF be extradited.

In a statement, the Bahamas Police confirmed that Bankman-Fried was taken into custody without a hitch at his Albany apartment complex at 6pm.

SBF's arrest resulted from financial offences alleged in the US which would also be offenses in the Bahamas, the statement said.

A sealed indictment filed by the Southern District of New York was the basis for the arrest. US Attorney Damian Williams confirmed this in a [tweet](https://twitter.com/SDNYnews/status/1602451395910803457). 

Last month, the exchange filed for bankruptcy in the US after it imploded [almost overnight](/news/article/sam-bankman-fried-lost-billions), leaving customers unable to access their funds. According to court filings, FTX owed its largest creditors around $3.1 billion.

The dramatic fall from grace has been the talk of the market. The exchange's CEO was expected to testify about the [company's collapse](https://www.nytimes.com/2022/12/09/technology/ftx-text-messages.html) in Congress on Tuesday.

## Bankman-Fried future looks clouded

According to the [New York Times](https://www.nytimes.com/2022/12/12/business/ftx-sam-bankman-fried-bahamas.html), the charges filed against Bankman-Fried include wire fraud, wire fraud conspiracy, securities fraud, security fraud conspiracy, and money laundering.

However, it's still unclear whether customers will be able to recover some, if not all, of their funds. A 2 November report on ties between FTX and Alameda, a trading company also controlled by the FTX CEO, exposed that Alameda's balance sheet was overexposed to FTT currency (FTX's token).

According to the extradition treaty between the US and the Bahamas, defendants may be returned to the US provided their offenses carry a minimum one-year sentence in both countries.

The 30-year-old has recently disregarded legal counsel and increased his public appearances, providing his version of his company's abrupt failure and typically portraying himself as an inept CEO.

"I didn't knowingly commit fraud," he said during a BBC at the weekend. SBF told the interviewer he didn't want any of this to happen and added that he was "not nearly as competent" as he believed himself to be.



red image of crime scene with pictures of Sam Bankman-Fried and a sign that says "bahamas"

Former FTX CEO Sam Bankman-Fried Arrested

A [report](https://www.wsj.com/amp/articles/ftx-hires-forensic-team-to-probe-money-trail-11670446435?mod=lead_feature_below_a_pos1) from the Wall Street Journal (7 December) claims that FTX has formed a team of financial experts to trace billions of dollars in “missing” customer funds from the company.

The new management at FTX is looking to get to the bottom of the entire crisis, and they’re not aiming for a slow process. The team has outsourced the matter to a group of financial forensic experts to find out how and where the funds could have gone missing.

To be specific, [AlixPartners](https://www.alixpartners.com/), a firm that specialises in financial matters, has been trusted with this mountain of a task. This advisory committee will be led by Matt Jacques, formerly with the US Securities and Exchange Commission (SEC) as a chief accountant.

FTX will try to recover as many of the missing assets as possible with the help of this newly formed committee. Furthermore, the crypto company will need further assistance to rebuild its financial infrastructure from the ground up.

## Summary of the FTX crash

If you're even the slightest bit involved in the crypto industry, you've probably heard the name FTX pop up a few times over the last couple of months - and not in a good light. The crypto company has been under fire for letting almost $450 million of customer funds disappear.

The whole debacle and the story of "[who’s to blame](/news/article/ftx-bankrupt-who-to-blame)" is a mystery, even after months of speculation.

It's not the first time the company's CEO, Sam Bankman-Fried, has been alleged to have mismanaged customer funds. In an interview with [Vox](https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy), Bankman-Fried claimed to have passed customer funds through Alameda Research, FTX’s sister company. He did admit his lack of control over his company’s operations, as he [tweeted](https://twitter.com/sbf_ftx/status/1590709166515310593?s=46&t=Br1_HGNzUBwspKZ7pF6myA), "I'm sorry. I f--d up" after the fiasco broke.

The company filed for bankruptcy in November. It's difficult to see them making a comeback, largely due to two major factors:

•	The global negative PR that the company has been a victim of over the period of several months.

•	A low probability of recovering the lost funds.

FTX’s new management will need a miracle to even get crumbs from this entire mess.



red image of money with sam bankman-fried in the foreground

FTX Brings in Financial Experts

Elon Musk, the CEO of both Tesla and Twitter, [tweets his thoughts on Sam Bankman-Fried's reported donation to the Democratic Party](https://twitter.com/elonmusk/status/1598993109786189826). Musk believes the co-founder and former CEO of the defunct cryptocurrency exchange FTX sent far more money to the party than what was officially acknowledged.

Replying to a tweet by Will Manidis, CEO of ScienceIO, which mentioned that SBF donated $40M to the Democrats, Elon said he believes the amount contributed by the former CEO of the fallen crypto exchange FTX is far bigger than what has been publicly announced.

![elon.PNG](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/elon_2943e6d6a1.PNG)

## SBF donating to political parties - Not for the first time

It is not the first time San Bankman-Fried has donated to a political party. He has previously acknowledged giving to the Republican Party in a covert manner.

 In 2020, he was reported to have given $10 million to assist Carrick Flynn, a failed Democratic candidate for a House seat in Oregon, while also giving $5.2 million to Joe Biden's presidential campaign.

He gave Democrats $39,884,256, according to Opensecrets, before FTX collapsed and had to file for [bankruptcy](/news/article/ftx-bankrupt-who-to-blame). The exchange meltdown caused millions of dollars in losses for investors and users. A probe into FTX's handling of consumer money improperly is now underway. The fall of FTX sparked a contagion that has caused several other platforms and [companies to struggle and some to collapse](https://cryptopotato.com/how-wide-does-ftx-contagion-spread-the-affected-companies-so-far).

Then Elon Musk tweets his allegation that the publicly declared $40M donation is incorrect and the actual amount could be anything above $1B. The internet is already flooded with articles and comments alleging that Bankman-Fried donated this amount to a political party to avoid going to jail.

Meanwhile, SBF has been invited to participate in an investigational hearing set on 13 December, 2022, by Democratic House Financial Services Committee Chair Maxine Waters and Republican Ranking Member Patrick McHenry.

The crypto community, alongside investors who lost their money in the FTX fall, is angry and waiting for justice. What is the future of SBF and will the investors get their money back? These are some of the questions people are looking to get answers to. Clarity will only come after a proper investigation.


Elon Musk Tweets 'Where Did the Money Go?'

After facing the digital equivalent of a bank run, the [imploding crypto trading](https://www.seattletimes.com/business/explainer-whats-happening-at-bankrupt-crypto-exchange-ftx/) 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](/news/article/ftx-uk-warning) Binance. However, the transaction fell through while Binance conducted due diligence on [FTX's](/news/article/ftx-vs-binance-liquidate-funds) 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](https://twitter.com/sbf_ftx/status/1590709166515310593?s=46&amp;t=Br1_HGNzUBwspKZ7pF6myA), 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](https://www.cnbc.com/2022/11/09/binance-backs-out-of-ftx-rescue-leaving-the-crypto-exchange-on-the-brink-of-collapse.html) to purchase it.

He is worth an estimated $23 billion and has been a major political donor to Democrats.



FTX bankrupt: Who's to blame?

[Sam Bankman-Fried](/news/article/bankman-fried-crypto-hack-fix) has vanished from the Bloomberg Billionaires Index after his estimated personal wealth fell nearly 94% in a single day to $991.5 million.

Bankman-Fried was worth an estimated $15.2 billion before his company's cash crunch, but according to Bloomberg, $14.6 billion was lost overnight. SBF became one of the crypto industry's darlings due to his rapid rise to financial success and eccentric personality.

## Binance to acquire Sam Bankman-Fried’s FTX

With the market moving as it is, it may take some time for bulls to recover, especially since the circumstances surrounding FTX's insolvency and whether or not CZ can bail out SBF remains unclear.

[FTX](/news/article/ftx-uk-warning) was reportedly seeking funding from Silicon Valley and Wall Street billionaires to cover the bank run on its exchange, according to [Semafor](https://www.semafor.com/article/11/08/2022/before-deal-with-rival-ftx-scoured-wall-street-silicon-valley-billionaires-for-1-billion-lifeline). This is surprising given that SBF previously stated that FTX's client holdings are not invested anywhere. However, it appears that one of the world's largest exchanges was looking for $5-6 billion to cover the liquidity crisis.

Meanwhile, Binance CEO CZ announced his intention to purchase FTX after concerns about the Bahamas-based exchange's apparent insolvency grew, causing withdrawals to slow and FTT tokens to plummet. However, they have signed a non-binding letter of intent, which means CZ can back out of the deal if FTX's problems are more severe than anticipated.

Prior to this, CZ announced on Sunday his plan to [sell off his remaining FTT token holdings](/news/article/ftx-vs-binance-liquidate-funds), which he acquired as part of his exit from FTX.

## What does this mean for cryptocurrency?

Even if [Binance](/news/article/guide-to-binance-uk) acquires [FTX](/news/article/what-is-ftx), antitrust laws may apply, and it is still being determined whether both entities can proceed with the merger.

Furthermore, FTT's bleeding appears unabated (down 70% for the day), which may make the exchange unappealing for acquisition, especially if most customers have already left.

Suppose this turns out to be another case of retail suffering massive losses. In that case, regulators may be compelled to impose stricter rules, further restricting the freedom crypto has relished in recent years.


Sam Bankman-Fried lost $14.6 billion overnight

[Sam Bankman-Fried](/news/tag/sbf), the cryptocurrency billionaire, has [proposed a framework for reducing the damage caused by the hacks and vulnerabilities](https://www.msn.com/en-us/money/other/billionaire-bankman-fried-tries-to-fix-crypto-s-hacking-problem/ar-AA13axks) affecting the sector. It includes setting the highest reward for attackers at $5 million.

Recently, crypto attacks have increased, with more than $3 billion looted from the crypto sector so far in 2022. This year is anticipated to set a hacking record.

The involvement of the FTX crypto exchange founder and CEO comes days after a hacker was allowed to keep $50 million of the approximately $100 million taken from the Mango decentralised finance programme. This was as part of a settlement with the platform following the heist.

In crypto, some white-hat hackers aim to reveal flaws in exchange for a reward rather than for nefarious purposes.
A white-hat hacker is a person who uses hacking techniques to find security flaws in the blockchain ledger in exchange for rewards. However, sometimes these rewards could be too costly to be justifiable.

As seen in the above case, the hacker was given 50% of the total value, accounting for $50 million of the $100 million funds. Such numbers must be addressed. They cause outrage and are unsustainable for the company and the community. For that reason, people like Bankman-Fried are seeking solutions to crypto hacking.

[Bankman-Fried](/news/article/ftx-acquires-bithumb) claims that implementing his [5-5 strategy](https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards) can reduce hacker effect by more than 98%, but he is still unsure about what should be the industry norm.

## Is DeFi an easy target?

DeFi protocols provide software-based algorithms that let cryptocurrency traders, borrowers, and lenders transact, borrow, and lend on digital ledgers without needing a central mediator. According to blockchain expert Chainalysis Inc. data, DeFi has been the primary target of most flaws and breaches this year. DeFi is hailed as crucial for the widespread adoption of digital tokens, which also suffered from this year's plunge in coin prices. 

The recent attacks are placing pressure on crypto players to find answers.



Bankman-Fried Floats Crypto Hack Fix

According to a series of letters sent on Tuesday morning, the 30th of August 2022, House Committee on Oversight and Reform requested information and documents from four agencies and five digital asset exchanges. [Coinbase](https://www.cnbc.com/quotes/COIN), FTX, Binance.US, Kraken, and KuCoin were among the parties contacted about what they are doing to protect consumers from scams and combat cryptocurrency-related fraud.
 
The letters request that government authorities and cryptocurrency exchanges respond by the 12th of September with details regarding their efforts to protect customers. According to the committee, the respondents' feedback will be utilised to develop legislative solutions.
 
The letters specifically request that the exchanges produce documents dating back to the 1st of January 2009. To demonstrate efforts to combat crypto scams and fraud, as well as efforts to identify, investigate, and remove or flag potentially fraudulent digital assets or accounts, as well as discussions about "whether to adopt more stringent policies.
 
In one letter to Sam Bankman-Fried, CEO and creator of FTX, the committee states that although some exchanges evaluate cryptocurrencies before listing them, others allow digital assets to sign up with little or no verification.
 
According to FTC analysis, more than $1 billion in cryptocurrency has been lost to fraud since 2021.
 
## Congress looks at crypto schemes developed by companies

Chainalysis, a blockchain analytics firm, discovered that [37% of crypto scam money](https://www.cnbc.com/2022/08/30/coinbase-ftx-binance-get-inquiries-from-congress-on-crypto-scams.html?__source=google%7Ceditorspicks%7C&par=google#:~:text=Blockchain%20analytics%20firm%20Chainalysis%20found,then%20vanishing%20with%20the%20funds.) last year went to "rug pulls". A rug pull is when someone lists a token on an exchange and invests in it to increase the price and market demand before selling the position at a premium and disappearing with the proceeds.

Binance US, which received an [investigation](https://www.reuters.com/legal/litigation/new-binance-class-action-likely-clears-one-hurdle-faces-plenty-others-2022-06-14/) from the committee on Tuesday, has been charged in a class action complaint with deceiving customers about the safety of investing in [terraUSD](/news/article/terra-usd) (UST) and its sister token, Luna.

The terms and conditions of the investor-crypto exchange agreement also differ, which needs to be standardised.
Agencies will continue infighting and cannot successfully implement consumer and investor safeguards relating to cryptocurrencies and the exchanges on which they are traded unless clear definitions and advice are provided. 






Congress investigates crypto firms scam protection

Voyager Digital Holdings, a centralised crypto lender, has rejected an offer from FTX and its investment arm Alameda Ventures to buy out its digital assets, claiming that the moves "are not value-maximizing" and may "harm clients."

In a rejection letter submitted in court on Sunday as part of its continuing bankruptcy procedures, Voyager lending attorneys condemned the offer made public by FTX, FTX US, and Alameda on Friday to buy out all of [Voyager's assets](https://news.yahoo.com/crypto-firm-voyager-sell-assets-132257571.html) and existing liabilities, leaving the defaulted loan to Three Arrows Capital (3AC).

## Bankman-Fried proposal plan

On Friday, the three businesses linked to FTX CEO Sam Bankman-Fried proposed a plan to Voyager in which Alameda would absorb all of Voyager's assets and utilise FTX or FTX US to sell and distribute them equally among subscribers affected by the bankruptcy.

[Bankman-Fried](/news/article/former-ftx-ceo-sbf-arrested) stated in FTX's news release that his idea was a method for Voyager customers to recover their losses and move on from the platform:

“Voyager’s customers did not choose to be bankruptcy investors holding unsecured claims. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business.”

In a late-night Twitter conversation, Bankman-Fried reiterated his firm's justification for asking to purchase Voyager. He claimed that Voyager's clients had "been through enough already," and that they should be able to retrieve their assets as quickly as possible because bankruptcy processes "can take years."

## Voyager Lending Response

On Sunday, in response to Bankman-Fried proposal plan, the Voyager lending claimed:

“The AlamedaFTX proposal is nothing more than a liquidation of cryptocurrency. It’s a low-ball bid dressed up as a white knight rescue.”

It also outlined six ways in which the proposal could "harm customers," including capital gains tax consequences, unfairly capping the value of each Voyager user's account at its July 5 value, and the effective elimination of the VGX token, which would "instantly destroy in excess of $100 million in value:"

The letter further rejected claims that AlamedaFTX had a better chance of obtaining purchase bids owing to the two companies' continuous partnerships, stating: "Nothing could be farther from the truth as indicated by this answer."

For more latest crypto news, Read [Latest Moni](/news).



Voyager lending rejects FTX’s buyout offer

The cryptocurrency trading platform FTX, which was co-founded by the billionaire Sam Bankman-Fried, is reportedly in advanced talks to buy the South Korean company Bithumb, according to a person familiar with the subject.

According to the individual, who asked not to be named since they were talking about something sensitive, the companies have been in conversations for several months now. A spokeswoman for Bithumb has stated that they are unable to confirm anything at this time.

The FTX spokeswoman that we reached out to declined to respond. [According to a person who spoke](https://www.bloomberg.com/news/articles/2022-07-22/bankman-fried-s-ftx-said-in-talks-to-buy-south-korea-s-bithumb) on the condition of anonymity to Bloomberg, the two exchanges have been negotiating the arrangement for a number of months now.

As of the time this article was being published, neither Bithumb nor FTX had responded to Forkast's request for comment on the topic. Sam Bankman-Fried, the co-founder and chief executive of FTX, has provided assistance to businesses like BlockFi and Voyager Digital when those companies have experienced a liquidity problem.

Bithumb is one of only five cryptocurrency exchanges in South Korea that have been granted permission to provide cash-to-cryptocurrency conversion services.

In South Korea, Bithumb was responsible for 17.1 percent of the entire cryptocurrency trade volume in 2017, second only to the Upbit exchange in that regard. By providing financial support to struggling businesses or acquiring them outright, Bankman-Fried intends to capitalize on the current downturn in the cryptocurrency industry.

This week, persons with knowledge of the situation stated that FTX and its American company FTX US are in talks to acquire fresh financing. If successful, this would put Bankman-Fried in a position to continue his deal-making frenzy, which has seen him commit almost one billion dollars so far.

According to the data provider CoinGecko, the cryptocurrency trading platform Bithumb, which was established in 2014, presently handles an average daily volume of trades worth approximately $569 million.

It was one of the crypto exchanges in South Korea whose premises were raided this week by local prosecutors as part of an expanding probe into Terraform Labs following the failure of the TerraUSD stablecoin in May. The investigation comes as a result of the collapse of the TerraUSD stablecoin. 

For more developments on the crypto news go to [Latest Moni](/news).


Bankman Fried's FTX is now in discussions to acquire Bithumb

If you follow the cryptocurrency markets, you have probably heard the term "crypto whale".
They are prominent players in the crypto world known to buy enormous amounts of a particular coin, often altering the market.

Read on to see how crypto whales affect the market.

## What is a Crypto Whale?

A whale is someone with a significant quantity of money to invest in the cryptocurrency markets. They earned the name because a whale is the largest creature in the ocean.

Whales can be individuals, groups, or companies, such as hedge funds or trusts.

## Who is the Biggest Crypto Whale?

The following are some of the publicly-known holders of large amounts of cryptocurrency:
•	[Sam Bankman-Fried](https://ph.news.yahoo.com/crypto-weekly-shrimps-whales-rescue-181438236.html)
•	Micheal Saylor
•	Brian Armstrong
•	Cameron and Tyler Winklevoss
•	Roger Ver

Each name on this list plays a significant role in the crypto markets, especially in [Bitcoin](/coins/btc).

## Crypto Whale Effect on Price

Whales can also increase price volatility, particularly when they move a significant amount of cryptocurrency in a single transaction.

For example, when an owner tries to sell their Bitcoin for fiat currency, the lack of liquidity and big transaction size put downward pressure on Bitcoin’s price because other market players see the transaction. Other investors are on high alert when whales sell, looking for signs that the whales are “dumping” their holdings.

The exchange inflow, or the average quantity of a particular cryptocurrency being deposited into exchanges, is a common sign that crypto-investors look for.

When a crypto whale dumps, the large volume can impact value on its own. However, it also sparks fear among other, smaller investors who follow suit, sell up, and further drive down prices.

## Crypto Whale Impact on the Crypto Market

Crypto whale activity has the potential to have a significant impact on cryptocurrency markets. This includes individual cryptocurrency prices and market capitalisation.

This is because whales frequently conduct trades worth tens or hundreds of millions of dollars. These large sell or purchase orders can cause considerable price fluctuations. For example, when a large buy order is placed, the price of a particular cryptocurrency can skyrocket since it signals to the market that the asset is in more demand.

When whales place a large sell order, the price can move in the opposite direction because the market receives the contrary signal, and the asset appears to be unloaded.

When a crypto whale makes large buys or sells, they can influence the market, resulting in a cascade of buy or sell orders.

About 1,000 people are thought to own nearly 40% of all Bitcoins. With so few people holding so much BTC, any substantial buy or sale from these mega-investors might swing the market in either direction. It may affect the market negatively or positively, depending on the signal received.

## Conclusion

Whales are an important element of the cryptocurrency ecosystem to understand. Their actions can induce price fluctuations up or down, resulting in dramatic market reactions. Some whales engage in high-volume trades regularly, while others merely amass and hoard as much as possible.

If cryptocurrencies continue to expand and become a more powerful asset class, the whales will become much wealthier and control an even larger share of the crypto sea.

It can confidently be stated that the whales control the crypto market, as their decisions influence the market. When they make huge investments, prices rise, and once they dump, due to the large amount removed, the market dumps as well.

As Bitcoin significantly influences other cryptocurrencies (altcoins), a BTC crypto whale has influence beyond their chosen coin.

Influencing the value of Bitcoin, up or down, sends ripples throughout the crypto market.


Latest Moni

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