Three questions about the bankruptcy of the FTX platform that plunged the sector into crisis

Catastrophe, inside days. FTX, the world’s second largest cryptocurrency platform, filed for bankruptcy on Friday, November 11, throwing this little-regulated sector into turmoil. The group was valued at round 32 billion {dollars} (30 billion euros). According to American media, the fortune of its ousted boss, Sam Bankman-Fried, about $16 billion robust, evaporated inside days.

Franceinfo already takes inventory of the crash in comparison with Lehman Brothers, the financial institution at the root of the 2008 monetary crisis.

What is FTX?

FTX is a platform that, like its competitor Binance, permits cryptocurrency to be exchanged towards different digital or conventional currencies. Just every week in the past, the group was thought-about the second largest cryptocurrency platform in the world.

As of Friday, it was operated from the Bahamas, the place it’s headquartered, by Sam Bankman-Fried, referred to as “SBF.” The 30-year-old entrepreneur has been a privileged interlocutor of regulators of this new sector’s exercise and a serious donor to the Democratic Party in the United States.

FTX loved the help of many American personalities. The former star couple invested in the firm shaped by American soccer participant Tom Brady and mannequin Gisele Bundchen and promoted it, as did former basketball participant Shaquille O’Neal. The Miami Heat NBA workforce has renamed its venue FTX Arena.

Why beneath the firm?

The turmoil started on November 2 when information studies emerged that Almeida Research Fund, owned by Sam Bankman-Fried, was investing in crypto-assets issued by in a dangerous monetary system that carries the threat of main conflicts of curiosity. . Based on an inside doc, the CoinDesk* web site was stunned to study that Alameda Research’s belongings are primarily FTT, a cryptocurrency used solely on the FTX platform.

Four days later, FTX competitor Binance introduced plans to promote its FTT tokens “on account of current revelations”. This choice precipitated the value of this cryptocurrency to drop and many shoppers rushed to promote their belongings saved on the FTX platform. Faced with the movement, FTX is unable to satisfy these withdrawal requests shortly on account of lack of funds.

First, Binance got here to the rescue of its competitor, providing to purchase it. But the firm ultimately Waived on November 9*, after an audit, a summons “mismanagement” Client Capital and an ongoing investigation by US authorities. The transfer spelled demise for FTX, which filed for bankruptcy on November 11. “SBF” relinquishes the reins and the enterprise to liquidation specialist John J. Transferred to Ray III.

This fall was accompanied by a pc assault on Saturday. of “Unauthorized Transactions“Observed,” FTX chief authorized officer Ryne Miller mentioned on Twitter Saturday morning. According to cryptocurrency evaluation agency Elliptic, “$477 million would have been stolen”.

What are the penalties?

In the cryptocurrency world, some gamers in contrast FTX’s crash to that of Lehman Brothers, the financial institution whose bankruptcy triggered the 2008 monetary crisis. Binance boss Changpeng Zhao speculated that it was one “Relevant Comparison”* “It’s disappointing that the expertise that was created in response to the collapse of Lehman Brothers in 2008 has created its personal model of that occasion.”, Feedback Jeremy Allaire*CEO of Circle, one other participant in the sector.

It appears extremely unlikely that FTX will have the ability to pay all its collectors. “So much of common customers will lose their cash, so will probably be disastrous for the ecosystem in the quick time period”, estimates CoinDesk * Jay Jog, co-founder of that community, is one other firm on this sector. He is afraid of a “Faithful Loser” in cryptocurrencies from each institutional and particular person traders.

After this spectacular bankruptcy, the small world of cryptocurrencies can also be getting ready for a regulatory tightening. FTX is beneath investigation by the Securities Exchange Commission and the New York Department of Justice, in accordance with The New York Times* Citing sources accustomed to the investigation.

* All hyperlinks marked with an asterisk are in English

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