Cryptocurrency is steadily taking over the financial world, with businesses offering cryptocurrency payment options and investors trading all their funds. But the recent biggest financial debacle has given people much to think about, especially when it comes to investing their hard-earned money in crypto. Does the epic fall of the FTX exchange mean cryptocurrency trading is even more volatile than we thought or is there hope for recovery?
What Happened With The FTX Exchange?
At the start of November 2022, the cryptocurrency exchange FTX filed for bankruptcy, and its chief executive, Sam Bankman-Fried, resigned, which came as a big shock to the crypto industry.
Business – https://oneupblogs.com/category/business/
The whole financial debacle was referred to as “such a complete failure of corporate control” by John Jay Ray III, FTX’s new chief executive, who helped manage the aftermath of some of the largest corporate collapses in history, including the implosion of Enron in 2001.
Initially, the FTX crypto exchange grew to be the second largest in the world. A titan of the industry, seeing $10-$15bn traded daily, which led to Mr. Bankman-Fried being referred to as the “king of crypto.” The FTX filed for bankruptcy at the end of last week in November after Binance, FTX’s main competitor, reversed course on a deal to save the company.
Changpeng Zhao, the chief executive of Binance, sold his stake in FTX back to Mr. Bankman-Fried last year, who paid for it partially with FTT tokens. Traders use FTT tokens to pay transaction fees.
It was discovered that Alameda Research, a hedge fund run by Mr. Bankman-Fried, had a substantial amount of FTT tokens, by a leaked document shown in the crypto publication CoinDesk report. Not to mention that Mr. Bankman-Fried created FTX in 2019 to generate funds for his trading business; thus, the success and failure of both entities were overlinked.
Politics – https://oneupblogs.com/category/politics/
Based on this revelation, Binance announced on November 6 that it would sell its FTT tokens. In response, FTT’s price plummeted, and traders rushed to pull out of FTX, fearful that it would be yet another fallen crypto company.
Binance said, “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient, and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
The fallout led to investors requesting withdrawals, which accumulated to $6bn over three days, and the company entered a liquidity crunch and didn’t have enough funds to fulfill all requests.
What Now?
After the backlash received days after the FTX exchange filed for bankruptcy, Sam Bankman-Fried addressed his followers in a series of tweets. He wrote, “I’m really sorry, again, that we ended up here. Hopefully, things can find a way to recover. Hopefully, this can bring some amount of transparency, trust, and governance to them. Ultimately, hopefully, it can be better for customers.”
He further emphasized that it doesn’t mean the end of his trading business, and he is piecing together all the details before giving his testimony to Congress.
In recent news, BitGo, the company tasked with locking down the assets of the failed cryptocurrency exchange FTX, said they’ve managed to recover and secure $740 million in assets so far, a fraction of the potential billions of dollars likely missing from the company’s coffers.
Conclusion
It is safe to say that the cryptocurrency world is unpredictable. The price of Bitcoin has fallen to a two-year low, and now FTX has followed suit. Is there any hope of recovery? While FTX is slowly recovering its assets, this crypto scandal will unlikely be the last. As a result, countries will either entirely ban crypto transactions (like China) or continue to take risks, but this time with a bold strategy.
