La Ftx cryptocurrency exchange platform has filed for failure in the United States: the collapse of theempire 32 billion built by the thirty-year-old entrepreneur Sam Bankman Fried, the former child prodigy of the sector (for insiders "Sbf") who at the same time decided to resign his resignation as CEO of the company. The platform in the last hours he went out of his way to raise billions to avoid collapse after i trader they had hurried to withdraw 6 billion dollars from the platform in sole 72 ore and the exchange rival Binance abandoned a proposed bailout deal this week.
The instance of failure was presented yesterday at federal court of Delaware under Chapter 11, the company said in a statement on Twitter, and it understands Principal Ftx international exchange, Its cryptocurrency market in the United States, Bankman Fried's proprietary trading group, AlamedaResearch, and about 130 affiliated companies. The Chapter 11 it is a bankruptcy procedure that allows the company to continue operating while negotiating with creditors.
It can be compared to the tragic crash of the Lehman Brothers, which unleashed the crisis of 2008 ?
The collapse of what was believed to be one of the most stable cryptocurrency companies in the world, according to Changpeng Zhao, director of rival cryptocurrency exchange Binance “could lead to dire consequences for other companies in the sector as well,” reported the Financial Times, while the New York Times announces that among the experts the incident is already being compared to the tragic crash of the Lehman Brothers, which unleashed the crisis of 2008.
“The shock was this guy who was the face of the cryptocurrency industry and instead it turned out the emperor had no clothes,” he told Reuters Thomas Hayes, managing member of Great Hill Capital LLC in New York.
This week's turmoil has affected the cryptocurrency markets already in trouble, driving bitcoin to a two-year low. Bitcoin fell further following the FTX announcement, shedding 5,71% to $16.791 on Friday night. Stocks of cryptocurrencies and blockchain-related companies have also plummeted in the news. FTX's FTT token plunged 30% on Friday to 2,57, suffering an 88% loss for the week.
The former child prodigy of the industry apologizes. Over 100.000 creditors
Bankman–Fried, whose net worth was estimated by Forbes to $26,5 billion a year ago, he apologized repeatedly.
"I'm sorry really, again, that we ended up here,” he said in one series of tweets.
In its filing for bankruptcy, FTX Trading claimed to have $10 to $50 billion worth of organisers' activities, from 10 to 50 billion dollars of liabilities and over 100.000 creditors. John J. Ray III, a restructuring expert, has been named CEO. Ftx customers are currently unable to withdraw their own funds and those who had bought Bitcoin.
How did we get here? It is the third collapse since the beginning of the year in the crypto world
This is dethe third collapse since crypto world since the beginning of the year: after the crush of the stablecoin EARTH in May, followed by the bankruptcy of the cryptocurrency lending company Celsius, which had nearly 1,8 million users, in July.
Until a few days ago, the growth potential of the thirty year old Sam Bankman Fried it seemed limitless, as did his ambitions. It had been defined by others “the new Warren Buffett”, had defined the potential for itself first "trillionaire" in the world. FTX picked up $400 million from investors in January, valuing the company at $32 billion. He attracted money from and to investors such as Singapore state investor Temasek and the Ontario Teachers' Pension Plan, as well as celebrities and sports stars, reports Reuters. For the Midterm elections, he had decided to donate $39.8 million to the Democratic cause (second only to George Soros). He could boast a rich networking of prominent personalities between the White House, Wall Street and Hollywood: Bill Clinton, Joe Biden, Tom Brady, Katy Perry attended his conferences in the Bahamas.
Bankman-Fried, known for his shorts and T-shirts, has transformed from being the symbol of cryptocurrency successes to the protagonist of the highest profile collapse of the sector.
As his company grew, how does he rebuild the Wall Street Journal, his was also beginning to emerge "dark side". Brusque with overseas regulators, arrogant in negotiations, flattering with US politicians to gain a competitive advantage over rivals. He would in fact have started pressing for one first regulation industry, of course shaped to his advantage. Furthermore, behind the scenes, FTX would have started using billions of dollars from customers to finance risky operations di AlamedaResearch, the digital currency company founded by Bankman-Fried: its capital would be composed mostly of “FFF tokens”, a cryptocurrency created by Ftx itself, of uncertain value. When these operations came to light, the meltdown began.
The clumsy moves: the role of Binance's Chinese CZ
Il hole in finances of Ftx, generated by these undisclosed loans, alone is not sufficient to explain the company's rapid transition from the stars to bankruptcy filings. L'antagonize his counterparts in the industry seems to have played a central role. Most cryptocurrency exchanges in the world, in fact, it was on two platforms: ftx, the best known in the USA, e Binance. The latter, larger, is managed by the Chinese billionaire Changpeng Zhao (also called “CZ”). The two initially they seemed to be on good terms, so that Zhao was among the first lenders by Ftx.
But Zhao, unlike Sbf, he was in no hurry to regulate an industry that has so far thrived outside the confines of traditional finance. "We will not support people lobbying other industry players behind their backs," he wrote Twitter. The coup de grâce finally came when information about Alameda began leaking that undermined FTX's perceived trustworthiness, as well as its financial stability. Under the pretext of being upset by the "recent revelations", Zhao announced that Binance yes it would be released of all FTT tokens held by the company. Which sparked a Domino effect which in a short time caused investor confidence to collapse. Almost immediately, hedge funds and other companies they ran to withdraw the money held in the form of FTT tokens. Alone Sunday, funds worth 5 billion would have been withdrawn. Zhao had initially offered to lend a hand to Sbf, to save the company, but had later decided to retract the agreement.
The fear of developments: will it be a domino effect?
“The next question is themagnitude of the contagion effect that this will have on other exchanges and where the next potential losses may occur,” John Griffin, founder of Integra FEC, which deals with financial fraud investigations, told Reuters. Since its inception, cryptocurrency operators have been trying to build an alternative scaffold that could supplant the traditional financial system. But the Ftx meltdown could score a serious setback in the expansive process of the industry, demonstrating the unreliability of a market that is still very opaque. While there have been few signs of a broader impact so far, they don't seem to have fully reassured investors and analysts. Dan Dolev, crypto analyst for Mizuho Securities, summed up: “The question now is: Can you trust any cryptocurrency investment?” In a market, such as the financial one, where trust is everything.
