Cryptocurrency exchange FTX collapsed this week after a bailout from its rival Binance failed and there appeared to be little chance of receiving additional rescue funding. Sam Bankman-Fried, the company’s chief executive, said he was looking at every possibility for his firm before stepping down.
Here is a history of FTX since its foundation in 2019, Scroll down for the latest updates ->
May 2019 – Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.
August 2020 – FTX acquired the mobile portfolio tracking application, Blockfolio for $150 million.
July 2021 – A $900 million funding round valued FTX at $18 billion.
September 2021 – FTX signed a sponsorship deal with Mercedes’ Formula 1 team.
October 2021 – FTX raised capital at a valuation of $25 billion from investors including Singapore’s Temasek and Tiger Global.
January 27, 2021 – FTX’s US arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.
January 31, 2021 – FTX raised $400 million from investors including SoftBank at a valuation of $32 billion.
Here’s a breakdown of everything that’s happened to FTX this week.
Nov. 2: It begins.
Based on a leaked balance sheet for Alameda Research, FTX CEO Sam Bankman-Fried’s trading firm, CoinDesk reported that much of its reserves were based on FTT, “FTX’s own centrally controlled and printed-out-of-thin-air token,” Swan Bitcoin CEO Cory Klippsten told CoinDesk. FTX uses FTT as a reward currency for trading discounts, and Alameda held far more of the tokens than traded on the market, suggesting its stake would be hard to liquidate at current prices.
Nov. 6: Binance says it plans to pull out of FTT.
Binance CEO Changpeng “CZ” Zhao said his company, the largest crypto exchange, planned to sell its FTT holdings, which dated back to an early investment by Binance in FTX. CZ compared FTT to the imploded luna token, which Binance also previously backed. FTT’s price started to wobble after this announcement.
Nov. 6: CZ and SBF have a tiff.
The warring crypto CEOs engaged in an exchange of barbs on Twitter, with Bankman-Fried ultimately imploring Zhao and others to “Make love (and blockchain), not war.”
Nov. 8: Binance offers a bailout.
FTX stopped paying back customers, its first visible sign of weakness. The love seemingly arrived quickly, with Binance signing a nonbinding letter of intent to buy its smaller rival. CZ said in a tweet that FTX “asked for our help” as it faced a “significant liquidity crunch.” FTT plummeted by another 75% on Tuesday after CZ revealed his takeover plan.
Nov. 9: NVM! Binance backs out.
Love didn’t last. Binance quickly reversed course and backed away from the deal after a “corporate due diligence” review revealed issues in FTX’s financial situation that Binance said were “beyond our control or ability to help.”
Nov. 9: U.S. regulators reportedly begins investigating FTX.
Along with its liquidity crisis, the Securities and Exchange Commission and the Commodity Futures Trading Commission started investigating the company’s relationships with sister entities Alameda Research and FTX US, as well as allegations that the company mishandled customer funds.
Nov. 9: FTX’s bad luck spreads to the rest of the crypto industry.
Crypto.com stopped withdrawals of USDC and USDT on the Solana blockchain Wednesday out of an “abundance of caution,” CEO Kris Marszalek wrote on Twitter, citing FTX’s role in trading Solana-based stablecoins and operating a Solana bridge. Solend, one of the larger Solana lending protocols, reported it was having problems liquidating part of a large loan Wednesday morning. It also disabled all borrowing, according to its website.
Nov. 10: Alameda Research falls.
Bankman-Fried announced that Alameda Research will wind down trading on Thursday as a Hail Mary effort to save FTX. “I fucked up, and should have done better,” he said in a Twitter thread announcing the move. “[R]ight now, we’re spending the week doing everything we can to raise liquidity. I can’t make any promises about that.” The company was also weighing bankruptcy.
Nov. 10: FTX scrambles for cash.
According to a Reuters report, FTX is now seeking around $9.4 billion in rescue funds from investors, seeking liquidity as many users pulled out their holdings. Bankman-Fried was reportedly in talks to raise cash from rival exchange OKX and stablecoin issuer Tether. He also sought a cash infusion from current FTX investors, including Sequoia Capital. He did manage to strike a deal with Justin Sun, the founder of blockchain network Tron, to allow holders of Tron-related tokens to withdraw their holdings from FTX.
Nov. 10: FTX US warns of potential trading pause.
Despite Bankman-Fried saying in a Twitter thread that FTX US “was not financially impacted by this shitshow” and was “100% liquid,” a banner on the top of FTX US website reads “trading may be halted on FTX US in a few days. Please close down any positions you want to close down. Withdrawals are and will remain open.”
Nov. 11: FTX files for bankruptcy and Bankman-Fried steps down.
FTX filed for Chapter 11 bankruptcy. The company also announced that Bankman-Fried resigned as CEO. FTX, Alameda Research, and roughly 130 affiliated companies started bankruptcy proceedings “to review and monetize assets for the benefit of all global stakeholders,” the company announced on Twitter. The filing includes FTX US, despite Bankman-Fried previously stating that the operation was isolated from the financial chaos of FTX as a whole. John J. Ray III, a lawyer who helped run Enron post-bankruptcy, has been named CEO of the FTX Group. Bankman-Fried, often known as SBF, will remain “to assist in an orderly transition.”
Nov. 12: FTX Faces Potential Hack, Sees Mysterious Outflows Totaling More than $600M
More than $600 million in crypto left bankrupt crypto company FTX’s wallets late Friday, with little clear explanation as to why.
Soon afterwards, FTX stated in its official Telegram channel that it had been hacked, instructing users not to install any new upgrades and to delete all FTX apps.
Nov. 13: Revelations
A source reportedly told Cointelegraph that Sam Bankman-Fried (SBF) and two of his associates are being held by Bahamian authorities after attempting to flee to Dubai.SBF is being questioned by Bahamas Police and regulators.
According to The Block, FTX has spent nearly $74 million on Bahamian real estate this year with over 10 purchases.
Mysteriously, 192 million new FTT tokens were created from the smart contract deployment, then sent to a newly created wallet. These tokens representing over $350 million then flooded the market, forcing Binance to block FTT deposits.
Several of the companies in which Alameda Research has invested appear to have been required to hold their cash on FTX as part of their investment terms.
Nov. 13: What’s next
Changpeng Zhao, the CEO of Binance, announces the creation of a joint emergency fund for the cryptocurrency ecosystem. Specifically, this fund will be for projects that are considered solid but are facing significant liquidity crises.
Binance ends FTT trading on selected pairs, from November 15 on the pairs FTT/BNB, FTT/BTC, FTT/ETH, and FTT/USDT. Only the FTT/BUSD pair will remain available for trading on the platform.
Kraken freezes assets owned by FTX and its branches “to protect their creditors”.
Banking giant VISA is ending its partnership with FTX regarding the exchange’s crypto-card
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