Cryptocurrency exchange FTX and its founder and former CEO, Sam Bankman-Fried have been one of the most trending topics these days. While sam trying to fight after being arrested on 12th December 2022- the impact of the crash has become a hectic piece of news to everyone. Here’s everything you need to know about FTX’s collapse, including its founder’s ascent to stardom, how the company failed, and the collateral damage to customers and the crypto industry.
The FTX Crash
The cryptocurrency world was thrown into chaos recently after FTX and Bankman-Fried’s trading firm, Alameda, were linked in a leaked financial document that raised concerns about their assets. The statement states that as of June 30, Alameda had assets worth $14.6 billion. Most of it comes from FTX, another Bankman-Fried company, which created the FTT token. It demonstrates how Bankman-trading Fried’s behemoth Alameda relies on a token created by a sibling company rather than a stand-alone asset like fiat money or another cryptocurrency.
Furthermore, another industry giant Binance backed out of a planned buying out of FTX after learning that the FTX’s financial records had unearthed “mishandled customer funds” and amid news reports that U.S. regulatory agencies were circling the smaller exchange. And it all went downhill from there.
FTX lost over $600 million, with $477 million stolen by hackers while the remaining amount was moved to cold storage. The company announced it had been compromised on its official Telegram channel and advised users not to install any new updates and to remove all FTX apps.
FTX wallet holders complained that their FTX.com and FTX US wallets had been drained of their balances. FTX’s API appeared to be down, which could account for this. According to on-chain data, various Ethereum tokens and Solana and Binance Smart Chain tokens exited FTX’s official wallets and moved to decentralized exchanges. After allegedly misusing or losing billions of dollars in customer payments, the company filed for Chapter 11 bankruptcy protection in the United States on the same day that the transfers took place. Online rumors regarding a potential inside attack on the company started to circulate, although they are primarily speculation for the time being.
In addition to declaring bankruptcy, Sam Bankman-Fried, also known online as SBF, the company’s chief executive officer, resigned. Given that he has amassed almost $26 billion just this year, he has appeared on numerous covers of the publications like Forbes and Fortune and has been compared to Warren Buffet. Naturally, he went down with his company. His fortune has been utterly destroyed, and the FBI in New York is currently looking into his enterprises.
How has the FTX crash affected Bitcoin and other Cryptos?
Experts say there are serious concerns about a sector that has become entirely unregulated as a result of FTX’s collapse. Retail investors who trusted FTX and the cryptocurrency market are uneasy, and they risk losing money as a result. Sam Bankman-Fried isn’t the only one impacted by this. The ripple effects of this chaos have really shaken up the entire cryptocurrency system.
As the effects of FTX’s collapse continue to reverberate through the market, everyone is still waiting to see if there are any further entities that could fail.
What’s the future like for crypto?
One positive shift this whole FTX fiasco has created is the call for stricter crypto regulations to protect the industry against further disasters like this one. Many blockchain giants like Binance’s CZ, founder Michael Saylor, and Crypto.com exchange CEO Kris Marszalek have stepped forward in support. If the FTX collapse and its effects on the broader cryptocurrency industry are any indicators, we need more effective market regulation.
In conclusion, users of cryptocurrencies must be more knowledgeable. The technology-driven social change is occurring at a glacial rate. In the end, the sector develops and learn through the process of trial and error.
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