Crypto-giant FTX collapses into bankruptcy

Crisis-struck Crypto-giant FTX has filed for bankruptcy in the United States, seeking court protection while it seeks a way to return money to users.

Former CEO Sam Bankman-Fried has also stepped down, the company said.

It is a massive turn of events for the 30-year-old, who previously led the world’s second-largest cryptocurrency exchange.

His FTX empire has collapsed in less than a week, shaking confidence in the already troubled crypto market.

FTX, its affiliated crypto trading firm Alameda Research, and approximately 130 of its other companies have filed for voluntary Chapter 11 bankruptcy in Delaware, according to a statement on Twitter.

Chapter 11 is a US bankruptcy procedure that allows a company to restructure its debts while continuing to operate under court supervision.

FTX Trading stated in its bankruptcy petition that it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and over 100,000 creditors.

Sam Bankman-Fried, the platform’s founder and CEO, also resigned after failing to raise billions to avoid collapse as traders rushed to withdraw $6 billion in just 72 hours.

How Sam Bankerman-Fried’s FTX Crypto empire collapsed?

Former CEO Sam Bankman-Fried was hailed as a savior of crypto before FTX’s implosion. Sam Bankman-fried founded the trading firm Alameda Research in 2017 and two years later he founded FTX an exchange platform for buying and selling cryptocurrencies. Right Now he is the majority owner of both firms 

On November 2nd, CoinDesk published a report, Alameda has $14.6bn assets at the end of June and most of that was FTX’s tokens which kinda arouse skepticism among industry players, & traders. Things escalated on November 6 when Binance said it would offload hundreds of millions of dollars of FTT. The announcement sparked mass withdrawals, and within 72 hours FTX processed $ 6 billion of transactions & a day later FTX was in a financial crisis.

 According to the WSJ, FTX is investigating a possible hack and has asked customers to avoid using the FTX website. According to the crypto analytics firm Elliptic Enterprises Ltd., more than $370 million in crypto funds appear to have gone missing.

The fallout has led other crypto companies to tout their reserves & call for transparency in the industry.

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