FTX, one of the world’s biggest and most popular digital currency exchanges, has filed for bankruptcy. This was abruptly followed by the formal resignation of the company’s founder and head executive Sam Bankman-Fried.
FTX Has Fully Gone Under
The company has been in hot water for the past several weeks. FTX experienced what’s been referred to as a “liquidity crunch” and initially sought the aid of its main rival Binance to bail it out of the dark hole that had been created for it. It appeared – at least for a while – that the larger firm was going to purchase the smaller one and become even more powerful in the long run, though this wasn’t to be.
Binance put out a statement saying that it was backing out of the deal as the problems swarming FTX were too big and too complicated for it to handle. From there, with billions of dollars gone, FTX had no choice but to enter the same route that so many other cryptocurrency companies have taken this year, from Celsius to Three Arrows Capital.
2022 has become a year of bankrupt crypto enterprises, and it looks like this is a trend that’s set to continue. FTX is an odd case because just a few months ago, it had enough money to be bailing out some of the other firms that were in trouble, though apparently, that money was already stretched too thin, and those in charge didn’t realize this. It has now joined the ranks of so many other failed crypto firms, suggesting that nobody in digital currency is safe.
Bankman-Fried is going to be replaced by American lawyer John J. Ray III, who previously served as the 2004 appointee to Enron when it was forced to liquidate all its holdings following massive financial fraud. In a statement online, Bankman-Fried told his followers:
I’m piecing together all the details, but I was shocked to see things unravel the way they did earlier this week. I will soon write up a more complete post on the play by play, but I want to make sure that I get it right when I do.
Several players and analysts took to social media to express their thoughts on the news. Carol Alexander – a professor of finance at the University of Sussex – commented:
The events of the past week have precipitated a Lehman Brothers moment for the entire crypto economy.
The Man Behind the Exchange Has Fallen
The wealth of Bankman-Fried – once considered one of the richest individuals in the crypto arena – has all but vanished. At one point, Bankman-Fried was estimated to be worth a whopping $16.2 billion. This number was reported in early 2022.
Now, in a seething stroke of humiliation, the disgraced crypto exec’s net worth has fallen to a measly three dollars.