Last week, a series of events stemming from a CoinDesk article led to the bankruptcy of one of the biggest crypto exchanges in the world, FTX.
Following the popularization of a leaked document showing the assets of Alameda Research, a Sam Bankman-Fried (SBF) company, investors in FTX find themselves on the ropes. Alameda, it turns out, holds a vast majority of its assets in FTT, FTX’s native token. This discovery spooks FTX holders and Alameda investors, triggering a flurry of panic selling that annihilates FTT’s price.
FTT’s descent poses a problem for Alameda Research, the quantitative crypto trading firm. FTT is Alameda’s core asset; its sudden devaluation puts the company at intense financial risk of defaulting on its loans. Facing liquidity risk, SBF reaches out to Binance CEO Changpeng Zao for help. Zao announces Binance will be acquiring FTX, saving thousands of customers from losing their deposits on the exchange, but after conducting some due diligence, Zao reconsiders.
FTX is left without a solution. Soon after, SBF declares bankruptcy and issues a public apology on Twitter. The apology does little to soften the blow, particularly after more information on FTX’s activities becomes publicly available.
In the days after …
Full story available on Benzinga.com