November 30, 2022

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The chaos and collapse of the cryptocurrency world: bankruptcy and a massive drop in prices

The chaos and collapse of the cryptocurrency world: bankruptcy and a massive drop in prices

The crypto empire of the man behind FTX, Sam Bankman-Fried, has collapsed. In recent years, FTX has been among the largest and most well-known companies in the crypto world.

Last week it became known that the company was short of money. Then it was speculated that the company lost as much as eight billion dollars that customers wanted to withdraw.

to me Sources familiar with this matter Bankman-Fried has been in touch with mutual funds and other investors before finally turning to main competitor Binance.

The competitor wanted to come to the rescue, but withdrew shortly after the rescue. This led to a cryptocurrency exchange app bankruptcy protection in the United States of America. In addition, Bankman-Fried resigned from the position of CEO of the company.

Also Read: Billions of Krones Mysteriously Disappeared From Crypto Platforms

The collapse of FTX is said to have precipitated the decision to lend billions of dollars to clients to fund risky investments by Alameda, which was an FTX crypto hedge fund. Wrote The Wall Street Journal Thursday.

cycle breakdown

Cryptocurrency prices are dropping again on Monday. This comes after a worsening crisis that affected the entire crypto world last week over the weekend.

Bitcoin, the world’s largest cryptocurrency, is down about 65 percent so far this year. On Monday, a single bitcoin cost $16,500, according to CoinDesk. According to analysts, the price of Bitcoin may drop below $10,000 in the coming days, he writes CNN.

Meanwhile, the world’s second most valuable cryptocurrency, Ethereum, has also fallen. In the past week, the price has fallen more than 20 percent, according to CoinDesk. On Monday, the cryptocurrency was trading at $1,231.

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The collapse of the cryptocurrency comes as investors are trying to recover from the bankruptcy of FTX Group, one of the biggest players in the crypto world.

Compared to the financial crisis

Many in the industry say the company’s downfall sparked a “Lehman moment.” In doing so, they point to the investment bank’s collapse in 2008, which sent shock waves around the world.

The head of the world’s largest cryptocurrency exchange agreed.

“There are a lot of risks,” said Changpeng Zhao, CEO of Binance, adding:

– We’ve seen in the last week that things have gotten worse in the industry, so we need some rules, and we have to do it right.

Zhao spoke at a conference in Indonesia on Monday. Last week, he said comparing the current turmoil in the crypto industry to the 2008 financial crisis “may be an accurate analogy.”

Also Read: Cryptocurrency Crash – Giant Facing Big Problem

investigates transactions

FTX moved from Hong Kong to Bahamas last year. At the time, former FTX CEO Bankman-Fried said that the Bahamas was one of the few countries that could establish a comprehensive regulatory framework for cryptocurrencies.

Authorities in the Bahamas said Sunday they are investigating possible criminal ties surrounding the company’s bankruptcy.

“In light of the collapse of FTX, a team of financial investigators from the Financial Crimes Investigation Branch is working closely with the Bahamas Securities Commission to investigate criminal involvement,” the Bahamas Police Force said in a statement. statement.

It is not clear which part of the FTX collapse the authorities are investigating.

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The investigation came a day after the bankrupt crypto exchange announced that it had launched its own investigation.

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.

FTX attorney Ryne Miller wrote on Twitter Saturday that the company is investigating abnormal activity in cryptocurrency wallets.

Information about the missing billions comes from the company’s legal advisors in the US, but it’s not clear where the money went or who’s behind it.

US authorities are now also investigating FTX.

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lost wealth

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.

The 30-year-old founder of the exchange has been a familiar face in the cryptocurrency industry. Seen by many as the “white knight” of the crypto world, he previously stepped in to save struggling companies after another cryptocurrency, the TerraUSD stablecoin, collapsed in May.

Among the investors in FTX are Blackrock and Sequoia Capital.

Sequoia, which has also previously invested in companies such as Airbnb, Instagram and WhatsApp, has cut the value of the FTX investment to zero.

At that time, the value of FTX was approximately 320 billion NOK.