CEO Sam Bankman-Fried has resigned on Friday after FTX sought for bankruptcy protection. Its affiliated companies along with Alameda Research – Bankman-Fried’s hedge fund also filed for bankruptcy. Following this news, the company confirmed there was “unauthorized access” to its accounts and funds had disappeared.
FTX, founded in 2019 by Bankman-Fried grew rapidly and was most recently valued at $32 billion. Bankman Fried attracted big investors like Sequoia Capital, who described their interaction with Sam as likely “talking to the world’s first trillionaire.” Sequoia has written down its $213 million to zero.
So Why did TFX Go Bankrupt?
FTX until last week was seen as the knight and shinning armour of the crypto world. Earlier this year Bankman-Fried bought a stake in the declining Robinhood platform to support them, and assets of Voyager Digital saving account holders from the company’s bankruptcy.
The company was in trouble as customers fled due to fears of FTX not having sufficient capital. Binance, rival crypto exchange had agreed to buy FTX but the deal fell through at the due diligence stage.
Bitcon, ether and many others continue to plummet as investors are grappling with the implosion of FTX. According to industry insiders this downfall compares to the 2008 Lehman collapse.
A Possible Hack and Further Investigation
Analysts are still unclear if the exchange was hacked or insiders of FTX had stolen funds as a debate riled up on social media. The new CEO John Ray III confirmed that the firm will be halting its ability to trade or withdraw funds.
Bankman-Fried moved the FTX headquarters last year from Hong Kong to The Bahamas, stating that it was,
One of the few places to set up a comprehensive framework for crypto.
The Bahamas securities regulators and Police Force are investigating FTX as of Sunday for any criminal misconduct. It has come to light that the SEC had started investigating FTX before it declared bankruptcy. They are targeting FTX executives, their knowledge of handling their customers finances and potential breaking of securities laws.
Repercussions
FTX will be moving their digital assets to cold wallet custodians. Miami Heat’s home area will be replacing their name as the county has decided to terminate their relationship with FTX. FTX logos will also be removed from Mercedes Formula One Cars.
The crypto fate remains unknown for now, to learn more watch the video below.
