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The Collapse of FTX

FTX is, or rather was, one of the largest crypto currency exchanges A cryptocurrency exchange is a marketplace where people can buy, sell, and trade cryptocurrencies such as BitCoin and Etherium. For those wanting to learn more on the basics of cryptocurrency and what it is, check out Suwigya Chaudhary’s article here. FTX recently, however, has filed for chapter eleven bankruptcy, which comes as a shock to many users and investors as they are now left with nothing as their money disappears when the company files chapter 11. This bankruptcy however comes surrounded by foul play, as company and investor funds were mishandled and used by the CEO Sam Bankman-Fried for private purchases including property, a private jet, and much more. Overall, the losses for investors as of now are well into billions of dollars. According to CNN, “The exchange owes about $1.45 billion to its top ten creditors, it said in a court filing on Saturday, without naming them.” 

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Creditors rapidly began probing regulators all over the world for information on the collapse of FTX, finding that they may already have over one million creditors. In total FTX owes about $3.1 billion to all of its debtors. 

FTX is based out of the Bahamas, and has been keeping assets there as well. In response to the sudden implosion of the company. The Royal Bahama Police have seized all FTX assets to investigate whether or not there is any criminal activity that played a part in the downfall of the company and the disgraced CEO. 

Many fear that the fall of FTX will radiate through the crypto world as a whole. One example of this is the downgrading of other exchanges within the stock market. This past week Coinbase, another major player in the world of cryptocurrency, was downgraded by Bank of America. According to Yahoo News, Bank of America states, “As a result, we downgrade COIN to Neutral from Buy and reduce our estimates. We feel confident that COIN is not ‘another FTX’ (only $15M of deposits on FTX platform per a Coinbase blog post and $5B of cash on hand as of 9/30), but that does not make them immune from the broader fallout within the crypto ecosystem.” 

With the downgrading comes more fear of the collapse of crypto currency as a whole, leading to the question of whether or not it truly is better, or whether it is a feasible idea anymore at all. It is important to remember to research who you invest your hard earned money with, especially in these times of extreme uncertainty and volatility in the market.

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