FTX stands aside as a result of, not like Voyager and Celsius, it’s the first main cryptocurrency trade to topple. Founded in 2019, FTX advanced right into a market the place, along with cryptocurrencies, retail buyers may commerce cryptocurrency derivatives — complicated monetary devices used to make bets on value swings. The firm additionally provided accounts that promised excessive yields. During a funding spherical in January, it was valued at $32 billion. Bankman-Fried, in the meantime, donated to Democratic lawmakers and courted regulators as he pushed laws that would have largely benefited his enterprise.
But in November, CoinDesk published a report exhibiting that Bankman-Fried’s buying and selling agency, Alameda Research, had an outsize variety of an FTX-issued cryptocurrency on its books. Days later, Zhao, the Binance chief government, stated he’d promote roughly $530 million of the coin, FTT. Panic ensued and FTT costs plunged, sparking an investor run on FTX. The trade froze withdrawals and, quickly after, filed for chapter.
The reason for FTX’s fall remains to be being untangled. But the Wall Street Journal reported that FTX loaned buyer funds to Alameda Research to fund its dangerous bets. In an hour-long reside interview final week with New York Times columnist Andrew Ross Sorkin, Bankman-Fried stated he “didn’t knowingly commingle funds.”
Prosecutors and regulators are nonetheless probing the collapse, and Bankman-Fried — together with a listing of celebrities who endorsed FTX — is dealing with a class-action lawsuit in Florida. Bankman-Fried said Sunday that he would testify earlier than a House panel as soon as he’s “finished learning and reviewing what happened.”
“Look, I screwed up. I was the CEO of FTX,” Bankman-Fried instructed Sorkin final week. “I say this again and again. That means I had a responsibility. We messed up big.”
Editing by Robbie Olivas DiMesio and Karly Domb Sadof.