FTX's imbalance has kept the crypto market in suspense for days. Many customers fear for their money. After all rescue attempts fail, one thing is clear: the crypto exchange is insolvent. Co-founder and CEO Bankman-Fried also resigns.
Troubled crypto exchange FTX is officially insolvent. The group of tech entrepreneur Sam Bankman-Fried claims to have filed for bankruptcy protection in the United States. Bankman-Fried also announced his resignation as CEO. The previous evening, the Bahamian securities regulator announced that it had frozen certain FTX assets and had applied for a liquidator to handle the transaction. The Group's international operations are based in the Bahamas. According to the group, the US proceedings under Chapter 11 of the insolvency law affect, among other things, the American crypto exchange FTX US and 130 other companies that together form the FTX Group.
The imbalance of the large trading platform for digital currencies such as Bitcoin has kept the crypto market in suspense for days. Many customers fear for their money. The crypto platform ran into payment difficulties on Sunday after doubts about capital reserves led to customer flight and billions in funds being withdrawn. According to the Bahamian securities regulator, FTX is suspected of embezzling customer funds, among other things. On Wednesday it initially looked as if the competitor Binance would take over most of the ailing group. But that plan fell through the next day.
Bankman-Fried had previously negotiated a $9.4 billion cash injection with other competitors and investors, a person familiar with the matter told Reuters. He is said to have held talks with the crypto exchange OKX and the venture capitalist Sequioa, among others. Experts previously assessed the chances of a rescue of FTX as low.
At the same time, another insider pointed out that the US Securities and Exchange Commission is investigating Bankman-Fried. In addition, the former Wall Street trader claims to be closing down his brokerage house Alameda, which is considered the trigger for the turbulence at one of the world's largest crypto exchanges. Against this background, calls for stricter regulation of the sector grew louder in the US. "Exchanges should not harbor such risks," criticized Neil Wilson, chief analyst at online broker Markets.com. "But out there is the Wild West and empires are built on sand."
Meanwhile, crypto bank BlockFi, which was set to be acquired by FTX in the summer, halted all customer withdrawals for the time being. According to the brokerage house Genesis, 175 million dollars are on fire in trading transactions on the FTX. In Japan, technology investor Softbank completely wrote off its stake in the crypto exchange. According to an insider, the amount was less than $100 million.
The cryptocurrency market was also in turmoil. The oldest and most important cyber currency Bitcoin and number two Ethereum have each lost around 20 percent in value since the beginning of the week. Bitcoin temporarily fell to a two-year low of $15,566. The FTX token, a kind of digital share certificate, even rushed down more than 80 percent. "The trust was gone from day one of this affair," said Fore Elite expert Zeng. "There's no telling it's coming back."
