On Friday, crypto platform FTX filed for bankruptcy protection in the United States, and the company’s founder, Sam Bankman-Fred, resigned as director.
Now it turns out that $662 million, more than 6.5 billion crowns, mysteriously disappeared from FTX after filing for bankruptcy. This is despite the fact that the authorities in the Bahamas, where the company is headquartered, have frozen all assets in the company.
What is clear is that within a few days Sam Bankman Fried lost his entire fortune, which was close to NOK 160 billion before the collapse. It has been described by Bloomberg as “one of the greatest wealth destruction in history”.
– It is, after all, a very big thing. Crypto expert Torbjørn Bull-Jensen, president of Arcane Crypto, says it is one of the biggest shocks to the crypto industry throughout history.
It was worth 320 billion Norwegian kroner
At the time, the value of FTX was close to NOK 320 billion, and among the investors were major players such as American Sequoia Capital.
Earlier this week, Sequoia cut the value of an FTX investment to zero. They have previously invested in Airbnb, Instagram, and WhatsApp.
At the same time, it was discovered that Bankman-Fried had another company, Alameda, that had unclear ties to FTX, including through the acquisition of FTT’s cryptocurrency, FTT.
This competitor prompted Binance to dispose of its entire FTT holdings, which are worth nearly NOK 5 billion. Other clients followed suit, and thus FTX had significant liquidity problems. This later led to bankruptcy.
Crypto expert Bull-Jensen also says that FTX and Sam Bankman-Fried are seen as one of the serious players in the industry.
– He was very active in Washington, D.C. and with the authorities, and he was the champion of the organization. He told everyone, even when he collapsed, that there was nothing wrong.
Bull-Jensen says it now appears that Bankman-Fried has not acted honestly.
The interesting thing is that he managed to fool everyone and everything. He’s got some of the biggest crypto funds to invest in. He was considered a genius, and was promoted by Fortune. It also helped many who suffered when crypto ran into trouble this spring, and has been compared to JP Morgan. He presented himself as an influencer, and that his only goal was to donate money.
Instead, he thinks it appears the goal was rather to make as much money as possible.
What it indicates is that the backdoors were encrypted to tamper with the systems. He thinks it could look like a systematic fraud, and it was done to move money from FTX to Alameda, amounting to NOK 102 billion.
Since then, large portions of that amount have disappeared. This was confirmed by several sources to Reuters.
Bankman-Fried commented on the bankruptcy on Twitter.
“I beg your pardon. This is the most important thing. I screwed up, and I should have done better,”
He says that he had a mask on during negotiations with Binance, and that the situation arose out of his fault. He explains that he misinterpreted many things, and that this is the background to the situation in which he and the company found himself.
“My first priority, above all else, is to do it the right way for users. And I will do everything I can to do it. To take responsibility and do what I can. We are now spending the week doing everything we can to increase liquidity. I can’t make any promises about that. But I will try .and I give my all if this will make this work.”
In a new dispute, FXT is now also investigating whether crypto assets were stolen and took all of its digital assets offline, according to CNN.
Cryptocurrency risk management firm Elliptic says that the assets that are supposed to be transferred or stolen could be worth more than 4 billion NOK.
It’s not the end of cryptocurrency
Torbjørn Bull-Jensen believes that regardless of the scale of the event, this is far from the end of the cryptocurrency.
This will boost bitcoin finance and decentralized finance. What happened here is that there is a broker who deceived the customers. The essence of cryptocurrencies is to make it possible to hold the money yourself, but that was difficult, and so many settled on central actors.
He believes there will be a shift that will benefit from the transparency you have in the blockchain. Bull-Jensen believes we will also see a faster development of regulatory processes, which have already been addressed.
– The important thing is that it will lead to severe washout in the industry. This is part of the evolution, it is not the end of cryptocurrency. Because it is the largest in many years. The industry is much bigger and stronger than it was in the past.
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