- FTX exchange filed for bankruptcy exactly one year ago today, November 17, with John Ray III stepping in as CEO.
- Its founder, Sam Bankman-Fried, was found guilty after a month-long trial with his counterparts taking the stand against his persona.
- FTX native token FTT is down 15% with a 25% drop in trading volume.
FTX exchange comes to mind today, November 17, despite the cryptocurrency market’s focus on the US Securities and Exchange Commission (SEC) over spot Bitcoin exchange-traded funds (ETFs). Interest comes to the fallen trading platform as calendar shows it is exactly one year since the platform filed for bankruptcy.
Also Read: FTT price skyrockets 150% in 48 hours but still makes no dent in recovering FTX bankruptcy losses
FTX bankruptcy anniversary hits
FTX exchange filed for Chapter 11 bankruptcy protection a year ago today, November 17. The bankruptcy came after a liquidity crisis surrounding its native token – FTT. A report exposed the platform’s leverage and solvency issues, triggering a bank run as customers sprinted to get their money out. Ultimately, FTX was unable to serve its customers, causing a halt of withdrawals.
Initially, the exchange had blamed the effects of the 2022 bear market. However, investigations later revealed that CEO and founder Sam Bankman-Fried (SBF) had been stealing from the exchange. It also revealed his misappropriation of customer funds via providing loans to FTX’s sister firm, hedge fund Alameda Research.
As a result,former Alameda Research CEO and ex-girlfriend of SBF, Caroline Ellison, and former FTX executives Gary Wang and Nishad Singh were all charged with various crimes.
It is imperative to note that in early 2022, FTX ranked among the largest cryptocurrency exchanges, recording a valuation of $32 billion. However, in the aftermath of an influx of withdrawals on the exchange in November, the trading platform was compelled to file for Chapter 11 bankruptcy. Discoveries later revealed that the exchange owes more than $8 billion to creditors.
When it happened, John Ray III stepped in as interim CEO to spearhead recovery efforts with hopes of reviving the platform. To this end, he assembled a task force to assess the possibility of resurrecting the exchange as a means of deriving more value for the creditors.
Sam Bankman-Fried has already been convicted of seven counts of fraud and conspiracy after a 12-member jury found him guilty earlier this month. Caroline, Singh, and Wang were key witnesses for the prosecution after entering guilty pleas. Based on their testimonies, Bankman-Fried directed them to commit crimes, including helping Alameda loot FTX and lying to lenders and investors about the companies’ finances.
Awaiting sentencing on March 28, 2024, SBF remains in jail after the court revoked his bail in August. This was fueled by concerns that he was tampering with evidence and intimidating witnesses. At the time, it was discovered that Bankman-Fried was using his bail period to intimidate Caroline Ellison by releasing private documents and journals.
At the time of writing, FTX token FTT price trades at $3.0921, down 15% in the last 24 hours and almost 90% since the trading platform went under.
FTT/USDT 1-day chart
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
