The topic we have all been talking about this week is the FTX way of the cross. There is so much information that we made a first part. We decided to do a second part. So grab your popcorn and get comfortable.
The scandal of FTX ended where we all thought it would, but we didn’t want to admit: bankruptcy. One of the most important exchanges in the industry had more and more licenses in many countries until they discovered the trash under Alameda’s carpet.
Binance Couldn’t Become Batman
In the first part, we stayed when Binance offered to acquire FTX to protect the industry. A few hours after CZ saw the true FTX’s numbers, it decided to retire the proposal. The total liquidity gap of FTX was $8 billion. This was impossible to cover without getting hurt.
FTX is a two-part company. FTX international and FTX US, and what CZ was going to buy was FTX international. Therefore, the purchase was not going to have the effect we all thought it would.
From the next Warren Buffett to an outcast in less than two months.
How did he end up here? A thread. 👇 pic.twitter.com/vVJHi2dmUK
— Duo Nine | discord.gg/ycc (@DU09BTC) November 9, 2022
After this refusal, the only solution to cover this patch was for a bank or investment fund to acquire FTX, including its debt. Meanwhile, users were desperate to withdraw their money from FTX. So, you can imagine what happened with the rest of the market right? The price of bitcoin dropped to 16,000 and the entire industry’s marketcap fell to $800 billion, levels we have not seen since January 2021.
Consequences of FTX’s Bankruptcy
CZ, the CEO of Binance, has already said that the consequences of the FTX bankruptcy will make us realize that the crypto winter is just beginning. It will be a brutal domino effect as many big investors put money into FTX tokens, where their price dropped 89% in the last 7 days. Here is a list of FTX’s investors:
List of major FTX investors
Sequoia Capital reported that its $213 million investment in FTX has likely turned to 0. Everything will be written off. pic.twitter.com/ExVM2p6YFX
— wolf (@ImNotTheWolf) November 10, 2022
On the other hand, crypto companies like BlockFi limited their user’s withdrawal capacity. So, Sam Bankman-Fried had to quit as the CEO, and the entire team behind the FTX Future Fund with the legal department did the same. There is nothing to save in this boat.
Of course, the SEC was not going to waste this opportunity and started an investigation against FTX.
BREAKING: The SEC is investigating FTX.
— unusual_whales (@unusual_whales) November 9, 2022
It is unacceptable that this exchange used $10 billion of its users’ money to give it to Alameda Research, led by Sam’s sister.
It is true that no one knew what Sam and the company were doing behind the scenes, compromising the money of many companies and individuals. Unfortunately, it is now FTX’s turn and I hope the other exchanges have learned their lesson.
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