A timeline of the monumental failure of the crypto exchange FTX

A massive surge of consumer transfers worth billions of dollars was sparked by worries about economic uncertainty at FTX, a top site where users may buy and trade cryptocurrency. However, FTX did not have enough money to compensate sellers; as a result, transactions were completely stopped.

Some cryptocurrency traders who used the website to transfer their cash might never get their funds refunded.

Among the most abrupt and significant company collapses in recent memory was that of FTX. An explanation of the chain of events that led to FTX's sharp and rapid decline is provided below.

On November 02, a significant factor in FTX's demise was its tight association with Alameda Research, a cryptocurrency investment company also established by Bankman-Fried. When news outlet CoinDesk revealed that a sizable amount of Alameda Research's holdings consisted of FTT, a token issued by FTX that enabled people of the exchanges to receive lower trading costs, major questions regarding FTX began to emerge.

The revelation aroused concerns regarding the capital reserves of Alameda Research and consequently FTX because FTT is difficult to convert into cash.

On November 06, In response to the story, Changpeng Zhao, also known as “CZ,” the CEO of competing cryptocurrency exchange Binance, declared he will liquidate all of the firm's FTT holdings, totaling $580 million in the token.

Significant tension was placed on FTX to handle the rapid demand for user withdrawal when a significant departure from a crypto powerhouse caused a wider selloff, analogous to a bank run. Insufficient money forced FTX to stop all client withdrawals.

On November 08, an agreement was negotiated for FTX to be acquired by Binance, the crypto exchange whose executive had contributed to the selloff. But on November 09, Binance pulled out of the acquisition of FTX. The Wall Street Journal claims that the Securities and Exchange Commission and the Justice Department have started an investigation into the FTX bankruptcy.

Leading venture capital company Sequoia Capital reduced its approximately $210 million investment in FTX to zero dollars. Following that, the FTX funds were frozen by a financial regulator in the Bahamas.

In order to analyze the worth of its remaining funds, FTX filed for Chapter 11 bankruptcy protection, according to a business notice.

John J. Ray III, who led embattled energy major Enron through the bankruptcy process in the 2000s, succeeded Bankman-Fried as CEO when the former announced his resignation.

On November 11, in order to analyze the worth of its remaining shares, FTX filed for Chapter 11 bankruptcy safeguards, according to a business notice. John J. Ray III, who led embattled energy major Enron through the bankruptcy process in the 2000s, succeeded Bankman-Fried as CEO when the former announced his resignation.

According to a Wall Street Journal article, key executives at Alameda Research were aware that FTX had given client deposits to the company to help it pay its debts, which has further sparked debate over the affiliation here between two companies.

On November 16, executives from Alameda and Binance were also requested to participate by House legislators during a session on Capitol Hill in December, in addition to Bankman-Fried.

Furthermore, a class-action complaint filed in federal court accuses FTX's celebrity backers, notably Naomi Osaka, Shaquille O'Neal, and Kevin O'Leary, of using misleading promises of a misleading goods to defraud unsuspecting investors.

Later that day, Vox published an interview in which Bankman-Fried insults authorities with an expletive, admits that his requests for stricter crypto regulation in the past were motivated by PR considerations, and expresses remorse over the company's insolvency.

And just recently, December 12, in accordance with the Royal Bahamas Police Force, Bankman-Fried was detained inside the Bahamas following federal authorities in New York filed public allegations included in a sealed indictment.

One month after FTX filed for $32 billion in insolvency, a person with knowledge with the allegations informed ABC News that Bankman-Fried is now facing a multi-count fraudulent prosecution.

The Demise of FTX and Its Effect on the Market

2021 was a successful year for cryptocurrency as the investment vehicle saw record earnings. But as the year came to a finish, and multiple macroeconomic headwinds were being felt by economies all over the world, the tide began to shift. These challenges had a significant effect on financial markets, with both stocks and fixed income assets experiencing difficulties.

Even before November 2022, FTX was acknowledged as one of the biggest cryptocurrency exchanges in the world, gaining considerable notoriety.

The firm's disastrous collapse sent shockwaves through the whole crypto ecosystem, sparking sales in other digital content.

The tarnished reputation of digital assets goes beyond the bitcoin market's sell-offs and raises serious worries about the industry, which is mostly uncontrolled. Cryptocurrency issues remain a problem for the financial instrument, despite recent increases in value and general acceptance, which have served to erode investors confidence in the entire system.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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