FTX is the most recent example of the instability of cryptocurrencies, following in the footsteps of Voyager and Three Arrows Capital.
It moved from being the industry's prospective rescuer, orchestrating rescues of failing enterprises, to needing a bailout itself in less than a week.
This post will go over the events that have impacted FTX this month.
Reports come to light that FTX's cash is based mostly on FTT, it's own centrally controlled token.
Binance CEO Changpeng “CZ” Zhao and FTX CEO Sam Bankman-fried have an argie bargie. Binance says it plans to pull out of FTT.
Binance offers a bailout. Binance appears to have fallen in love quickly, as it signed a nonbinding letter of intent to acquire its smaller rival.
Love was short-lived. After a "business due diligence" review found problems with FTX's financial status that Binance said were "beyond our control or ability to help," Binance swiftly changed course and withdrew from the purchase.
The Securities and Exchange Commission and the Commodity Futures Trading Commission started looking into the company's connections to sibling companies Alameda Research and FTX US, along with claims that it mishandled customer funds, in addition to its liquidity crisis.
FTX's bad luck spreads to the rest of the crypto industry.
Alameda Research falls.
According to Reuters, FTX is now looking for $9.4 billion in rescue cash from investors, as many customers have sold their stakes. Bankman-Fried was apparently in talks with rival exchange OKX and stablecoin maker Tether to raise funds. He also solicited capital from current FTX investors, such as Sequoia Capital. He did, however, reach an agreement with Justin Sun, the founder of blockchain network Tron, to allow Tron-related token holders to remove their holdings from FTX.
Trading may be suspended on FTX US in a few days, despite Bankman-Fried claiming in a Twitter thread that the exchange "was not financially damaged by this shitshow" and was "100% liquid." Any positions you wish to close, kindly do so. Withdrawals are still possible and will be.
FTX files for chapter 11 bankruptcy and Bankman-Fried steps down.