Sunday, 04 Dec 2022

Cryptocurrency exchange FTX now worthless, says key investor

Cryptocurrency exchange FTX now worthless, says key investor


Cryptocurrency exchange FTX now worthless, says key investor

Sam Bankman-Fried, a billionaire and major donor to the US Democratic party who has lobbied Washington for tighter regulation of the crypto market, was speaking following a run on his Bahamas-headquartered FTX exchange.

Customers withdrew $6bn (£5.15bn) in the 72 hours before Tuesday morning, Reuters reported, citing a message to staff at FTX, when the exchange was forced to block further redemptions in an effort to remain solvent.

It has yet to restart withdrawals, is blocking new account signups and advising existing customers against depositing.

The sudden collapse in value was prompted by leaked documents which implied that Alameda Research, a hedge fund tightly intertwined with FTX through its common owner, Bankman-Fried, was in effect insolvent.

The leaks about Alameda turned into a crisis for FTX when Binance, the largest cryptocurrency exchange, announced it would sell its own major stake in FTT. The fire sale that followed crashed the value of the token far below the $22 floor that FTX had committed to support, and prompted the equivalent of a bank run at FTX itself, as customers raced to withdraw their deposits faster than the exchange could process them.

The fight between the two exchanges briefly turned into an alliance, as Binance agreed to make a non-binding offer to bail FTX out and merge with it. But on Wednesday night, the deal fell through.

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