The Rundown on FTX
How Sam Bankman-Fried became the next biggest name in cryptocurrency failures
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The Latest Crypto Story
In between the crevices of my work and personal life, I’ve been seeing rumblings of a name that keeps reappearing in the news. Sam Bankman-Fried. Here’s how this name became the biggest name in cryptocurrency as of late.
Bankman-Fried is a crypto billionaire and ex-CEO of crypto exchange, FTX
FTX went bankrupt last week after deposits left the exchange
FTX experienced a hack in which millions worth of assets were stolen
A Timeline of Disaster
FTX’s story is similar to what happened to major banks during the Great Depression. Too many people withdrew their assets in a very, very quick timeframe. Ultimately, all of this took place over the course of a 10-day period.
11/2/22 - A news story broke regarding that FTX’s sister company, Alameda Research, held a position of $5 billion in FTT, the token FTX had been founded on
Holding a stake in your own currency doesn’t sound like a great start.
11/6/22 - Binance announced it would sell its entire position of FTT, nearly $23 million. Ultimately, the news story stirred up uneasiness regarding risk management for the rival company.
11/7/22 - FTX experiences a liquidity crisis. Where is the money to run the business? Gone. The value of FTT fell by 80% as a result.
11/11/22 - Bankman-Fried steps down as CEO of FTX and FTX files for Chapter 11 bankruptcy.
The Celebrity Exchange
FTX has been promoted on a variety of outlets from Super Bowl commercials to celebrity endorsements. Having been advertised, many regular people used the exchange to buy and trade cryptocurrency at the jeopardy of their assets. The collapse created meteoric damage to the wallets of everyday people.
What to Learn from This
FTX was the third-largest cryptocurrency exchange. With this collapse, we can foresee legislators continued involvement within the cryptocurrency space. This event can also be seen as a question of the legitimacy of crypto, especially during the “crypto winter” the industry is currently experiencing.
The fact of the matter is to continually question your public exchange if you’re buying and trading crypto. Last summer, I made the transition and transferred my Coinbase assets to a hardware wallet.
Although I don’t foresee Coinbase filing for bankruptcy, I’m continuing to be skeptical of where my cryptocurrency is held during this winter.
Have a great week,
Jordan