The story of FTX's collapse: From the top to bankruptcy in days!
FTX was one of the largest cryptocurrency trading platforms in the world, but it collapsed suddenly in November 2022, resulting in billions of dollars in losses and a significant shock to the crypto market. Here is the full story:
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1. The rise of FTX: A powerful platform and a genius founder
FTX was founded in 2019 by Sam Bankman-Fried, a young American known for his trading intelligence.
FTX quickly became one of the largest cryptocurrency platforms thanks to its advanced features, high liquidity, and major sponsorship deals (like agreements with the NBA and partnerships with celebrities).
Its value reached $32 billion in 2022, and Sam Bankman-Fried was considered the 'crypto genius' and the 'new Warren Buffett.'
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2. The beginning of the collapse: Leaks and suspicious financial reports
In November 2022, a news report revealed that a large part of Alameda Research's assets (an investment company owned by Bankman-Fried) consisted of FTT, the native currency of FTX.
This raised concerns that FTX was using customer funds to illegally support Alameda.
Binance, FTX's biggest competitor, announced that it would sell all of its FTT holdings, leading to a state of panic.
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3. The platform's collapse in a matter of days
Once the news spread, customers began to withdraw their funds from FTX at an alarming rate, leading to a severe liquidity crisis.
Within 72 hours, more than $6 billion was withdrawn, and FTX could not meet these requests.
On November 11, 2022, FTX officially declared bankruptcy, and the value of FTT dropped from around $25 to less than one dollar.
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4. Theft of $400 million after bankruptcy
Hours after the bankruptcy announcement, the platform suffered a mysterious hack, and approximately $400 million was stolen from its wallets.
The perpetrator has not been identified to this day, and there are speculations that the hack may have been from an 'internal source.'
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5. The arrest of Sam Bankman-Fried and his trial
In December 2022, Bankman-Fried was arrested in the Bahamas and then extradited to the United States on charges of financial fraud and money laundering.
In his 2023 trial, it was proven that he used customer funds to finance Alameda, invest in real estate, and make political donations.
In March 2024, a sentence was issued for him to serve up to 25 years in prison due to his involvement in the largest fraud scandal in cryptocurrency history.
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The results and impact on the crypto market
The collapse of FTX resulted in massive losses for investors, with millions of users losing their money.
The event caused a decline in investor confidence in cryptocurrencies and led to tightened regulations worldwide.
The crypto market continued to be affected by the crisis, but slowly began to recover with the entry of new institutions.
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Summary: A harsh lesson for the crypto market
The collapse of FTX was one of the largest scandals in cryptocurrency history, highlighting the dangers of a lack of transparency and poor management in this market. Many affected individuals are still waiting for their compensations, but the story will remain a warning for investors to exercise caution in the crypto world.
