FTX Crypto Exchange - a History of Global Collapse

The exchange was created in 2019 by Sam Bankman-Freed (SBF), actively advertised by celebrities. Initially, it was financed by the head of Binance Changpeng Zhao (however, due to the contradictions in views that arose in 2020, Bankman-Fried bought Binance's share in FTX back).

The collapse of the FTX exchange has been stirring the minds of everyone who is somehow connected with the crypto industry for the second month.

Nothing foreshadowed trouble until November 2 of this year, when the news portal CoinDesk, with reference to a non-public document that fell into their hands, reported that in Sam Bankman-Fried's personal hedge fund Alameda Research, 40% of total and almost 90% of net assets were FTT tokens issued by his own FTX exchange. After this news, the FTT token quotes sank by 7%, and then by another 8% after Zhao announced on Twitter that Binance was going to sell its FTT package with a total value of about half a billion dollars. SBF himself claimed on Twitter that the negative news fund around his exchange was nothing more than the machinations of competitors, but there was no stopping the avalanche of panic.

A natural question may arise - what does FTX have to do with it at all, if problems were expected at Alameda? Firstly, both companies were owned by the same person. Secondly, their relationship turned out to be much deeper than it initially seemed - FTX provided the Alameda Foundation with emergency funding for $4 billion, using its own FTT tokens for this. That is, in the event of the bankruptcy of Alameda (which looked very likely to be the outcome of events), the return of the loans issued to him by the FTX exchange would become very, very doubtful.

The result of all these intricacies was the withdrawal of $ 6 billion from the exchange by November 8 and a dive of the FTT token by 80% since the beginning of the month. In order to somehow cope with the situation, the exchange limited and even completely stopped the withdrawal of funds, but no one had any doubts - FTX had serious problems with fulfilling its obligations.

Where did these problems come from? Now the reason is already obvious - FTX did not just store client assets, but actively used them for not the most trustworthy purposes, in particular, to save Alameda, owned by the same SBF. This was a fatal mistake that led not only to the collapse of the exchange at the moment, but also to the lack of any desire among investors to at least try to help save it. On November 8, Sam and Zhao announced that they had reached a preliminary agreement on the purchase of FTX by Binance exchange. But the deal never took place - a day later, Zhao abandoned these plans because of the too gloomy and hopeless results of checking his potential acquisition. And according to the results of this story, Sam's fortune decreased by 95% in just a few days - $15.6 of his personal billions disappeared along with $200 billion of investors.

What has all this led to? To another undermining of confidence in the entire co-market - the same bitcoin for November 8-9 collapsed by 20%, ether - by 30%, altcoin Solana - by more than 50%. Several large crypto exchanges (including Huobi, OKX and KuCoin) have announced their intention to start publishing confirmations of the sufficiency of their reserves directly on the blockchain. The pioneer in this matter, as always, was the Binance exchange - it has already posted a list of addresses of specific crypto wallets, whose total assets amount to $ 69 billion. And all crypto traders and investors in the light of these events should not forget about the good old distribution of funds not only on different coins, but also on exchanges.

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