Crypto trading platform FTX is on the verge of collapse less than a year after being valued at $32bn.
In a fresh blow to the industry, other platforms have also suffered heavy losses after cyrptocurrency giant Binance pulled out of plans to buy FTX. Binance CEO Changpeng Zhao said that FTX’s issues were “beyond our control or ability to help”.
The embattled platform’s founder, Sam Bankman-Fried, was once “one of the crypto industry’s most well-regarded figures”, said Wired’s Joel Khalili. But the tycoon’s wealth reportedly dropped by 94% overnight this week as investors lost faith following the bailout U-turn.
What did the papers say?
CNBC reported that Bankman-Fried’s “crypto empire” was “on the brink” after Binance backed out of the takeover.
According to Bloomberg, Bankman-Fried saw his personal fortune drop from more than $15bn to $991.5m overnight on Wednesday. And “the value of an FTX Token, a mechanism for sharing the firm’s profits, has fallen by 84%” since last Friday, The Economist reported.
Sources claimed that Bankman-Fried had started this week “scrambling to raise money from venture capitalists and other investors before he went to Binance”, said CNBC. Now, “it’s unclear who is next in line to buy the beleaguered crypto exchange”, with insiders reportedly claiming that Bankman-Fried “told investors that the company is facing a shortfall of up to $8bn from withdrawal requests and needs emergency funding”.
The New York Times’s crypto reporter David Yaffe-Bellany described the crisis as “a stunning fall for a celebrated executive”. According to Yaffe-Bellany, this fall was triggered “in large part” by “Twitter posts from a rival that questioned the stability of FTX’s business” and resulted in a sudden “three-day bank run” on the platform.
Reuters said “the seeds of FTX’s downfall were sown months earlier”, however. Bankman-Fried staked millions of dollars “to save other crypto firms as the crypto market collapsed amid rising interest rates”, but these deals “led to a series of losses” that FTX couldn’t absorb, the news agency reported.
In another killer blow, Binance then not only ditched the bailout plan but also sold its holding in FTX’s native coin, FTT. The move fuelled the sell-off this week, which FTX “could do nothing to stop”, said CNBC.
Source:: The Week – All news