Postmortem FTT Collapse – How Kids “Driven” FTX Without “Experience”

Every day is a blessing, but this morning you woke up feeling down looking at the sick price charts. It seems that your attempts to make a wise trading decision with a proper risk assessment have waned. And the only friend who accompanied you on this arduous journey was Mr. “Loss.”

Hoping to recoup your initial investment, you held onto your cryptocurrency unwilling to exit your trades. Well, if this is exactly your story, don’t be discouraged. Stop thinking about your losses. To feel better, look at the case of Sam Bankman-Fried (SBF) because your situation is much better than he is at the moment.

They say history repeats itself, but SBF seems to have created a one-of-a-kind history. On November 11, Samuel Bankman-Fried resigned as CEO of FTX when his crypto exchange filed for Chapter 11 bankruptcy protection in the United States.

Here is the latest news on this issue

According to a statement from the embattled crypto exchange, Alameda Research’s crypto-trading fund FTX, along with 130 other companies, has filed voluntary Chapter 11 bankruptcy proceedings in Delaware.

Surprisingly, on the same day, FTX revealed in its official Telegram channel that “FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Do not enter the FTX website because it may download Trojans.” As of press time, the case was still unfolding while there was an air of it being a “complex hack”.

However, amid market turmoil, the investigation of Sam Bankman-Fried by the Department of Justice and the Securities and Exchange Commission (SEC) continued. This is to find out if any criminal activity or securities related offense was committed during the FTX operations.

Just a few months ago, SBF was seen as a crypto white knight, bringing back beleaguered crypto firms that shuddered as prices sought to the downside. But that has changed, and according to Bloomberg’s net worth estimates, Bankman-Fried’s fortune was around $16 billion as of Monday (November 7). By Friday (November 11) his fortune had vanished completely.

Analyzing the situation from his point of view, Colorado-based tech entrepreneur and mathematician Charles Hoskinson described the FTX disaster as “an existential threat to the stability of the cryptocurrency ecosystem.”

According to him, in retrospect, there were huge warning signs, everything from talent to company management to financial strategy that underlined FTX’s volatile state. In this regard, the founder of Cardano claimed,

“That’s what usually happens when you have regulated businesses in a position of trust that are run by kids who have no experience.”

Similarly, referring to the collapse of FTX, Binance CEO Changpeng Zhao (CZ) warned crypto users on November 11.

We should not forget here that Binance and CZ have played an important role in the entire FTX crash saga.

Decoding Binance Factor With Timeline

November 2

Everything was going relatively well for the FTX crypto exchange until Wednesday (November 9) when a crypto news publication revealed the balance sheet of Alameda Research, FTX’s sister hedge fund. It turns out that Alameda had billions of dollars in FTT. In fact, it used it as collateral on more loans – information that users and financial transaction tax holders were apparently unaware of.

Now this simply means that the performance of both companies has been highly dependent on FTT’s FTX token. It is clear that the decrease in the value of FTT will automatically affect the entire ecosystem.

November 3

After the disclosure of Alameda’s balance sheet, Fear of Uncertainty and Doubt (FUD) dominated the market. Hence, selling pressure started to increase. Alameda has reportedly been involved in risky business activities for some time. It is entirely possible that FTX was somewhat involved given that Alameda was of course the primary market maker for its own exchange. A lot of speculation began to spread on social media about the nature of the relationship between the two companies.

Some speculated that user money on FTX found its way into Alameda behind the scenes. This has developed into concerns that FTX does not have enough cryptocurrency in its possession to respond to users’ withdrawals.

November 4

Crypto holders are gradually withdrawing from FTX out of caution. Bank rose on FTX then Discover That FTX reserves of Stablecoins, ETH and other cryptocurrencies were rapidly declining. This confirms that the cryptocurrency exchange was facing the heat of user withdrawals. This was something the SBF denied all along.

November 6

When Binance got word of what was happening within the FTX ecosystem, it announced that it would be selling its holdings from FTT. News that Binance will sell FTT has led to speculation that FTX may delist BNB from the exchange in retaliation. This has resulted in both BNB and FTT experiencing huge fluctuations on the charts.

November 7

SBF responded to CZ’s decision with its series of tweets, claiming: “A competitor is trying to stalk us with false rumours.” He even said, “FTX is good. The assets are good.”

The feud continued on Twitter for a few days. However, SBF seemed quite confident in the company’s position. He denied all allegations that the cryptocurrency exchange is not experiencing a liquidity crisis.

November 8

It later emerged that SBF was facing selling pressure. The stock market had huge liquidity problems.

In response, Zhao announced that Binance would buy FTX and bail it out. This brought temporary relief to all FTT holders in the crypto community. The whole market waited patiently for CZ’s decision.

November 10

Surprisingly, hell broke out when CZ announced that his company would not go ahead with the acquisition of embattled crypto exchange FTX.

unforgettable consequences

After the unwelcome events, the FTT token has dropped from around $22 on November 7 to $2.23 at the time of writing. The entire cryptocurrency market has been affected by the FTX disaster. Some considered it worse than a LUNA disorder.

The DeFi market has faced the heat of the FTX turmoil with the majority of coins and projects reporting negative stats over the past few days.

Every other cryptocurrency linked to FTX has faced selling outrage. Keep in mind that Solana, a top 10 cryptocurrency and one of Bankman-Fried’s biggest investments, has lost 32% of its market capitalization in the past few days.

In fact, even Coin King has been trading at a loss of 20.99% in the past seven days.

The mood in the market, at the time of this news, was tense and controlled mainly on research and development. As the crypto community awaits further developments in the case of FTX, some speculate that this is just the beginning. The bottom is far ahead.

FTT Collapse Postmortem – How FTX “Kids Driven” With “No Experience” – Coinphony [SV]

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