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FTX and its affiliated entities filed for Chapter 11 bankruptcy protection in Delaware federal court on Friday. This means the company can continue to operate while the debt is restructured under court supervision.
The company, which was valued at $32 billion by private investors earlier this year, said its aim was to “initiate an orderly process to review and monetize assets for the benefit of all global stakeholders. to do.
The bankruptcy filing follows a chaotic week for the crypto market. Negative talk about FTX’s financial health led to a style of banking exodus that pulled in about $5 billion in just two days.
After appealing to investors and rival exchanges, FTX agreed to be bailed out by rivals binance However, just one day later, due diligence revealed FTX’s “insurmountable” financial problems, and the deal fell through.
financial times report FTX’s balance sheet showed that the bankrupt cryptocurrency exchange has only $900 million in assets that can be easily sold, despite $9 billion in debt.
flat Sam Bankman-Fried The co-founder of crypto exchange FTX admitted that he was “shocked to see things unfold like this” when stepping down as chief executive.in the long thread above twitter, He explained frankly what was wrong.
“I messed up and should have done better,” said Bankman-Fried. “I should have communicated more recently.
Bankman-Fried replaced by new CEO John J. Ray III, A lawyer who previously worked for a venture capital firm and also oversaw liquidations Enron After the company went bankrupt in 2001.
So what does this mean for the digital asset market? Let’s share some perspectives from our community.
for Daniele Selvadei CEO and co-founder of e-commerce platform Sellicksthe collapse of FTX could affect the market.
he said: This is probably because FTX is his second largest exchange and he funds projects on multiple other platforms.
“This is what happens when an inexperienced team handles billions of dollars. Sam Bankman-Fried literally went around saying this was a Ponzi scheme. It’s crazy.”
Marcus Sotirioan analyst at a listed digital asset broker global block, We’ve also seen some ‘havoc’ from FTX’s drop, but it’s unclear how that will affect the market.
We have yet to see a ripple effect on the rest of the industry. But so far we have seen BlockFi on the brink of bankruptcy. FTXabout 130 additional companies associated with FTX, including FTX US and Alameda Research, have also initiated bankruptcy proceedings.
So far Bitcoin has not reacted too negatively to the news and we can enjoy the fact that the market is clearer than it was a week ago. could have detrimental effects on the crypto ecosystem. Inflation data remain cautious because of the volatility. “
Says FTX is the Lehman Brothers Moment of cryptocurrencies Nick Saponaroco-founder and CEO divilaboa decentralized payments ecosystem with a mission to improve people’s lives by making crypto easier and accelerating its mainstream adoption.
“It’s actually worse,” he continues. “In 2008, investors would have had some protection. FTX investors don’t do that, and if history tells us anything, they’re going to lose it all. Inevitably, global regulators see this as a cue to step in and crack down on the industry, making it very difficult for DeFi providers to operate without third-party oversight. It’s the exact opposite of why.”
The opportunity for DeFi to stand out and demonstrate its value before regulators step in is very limited. Until then, we will continue to be at the mercy of regulators and centralized propositions to persuade people to use their services.
for Torsten Dewing Head of ETC Platform for Investment Platform HANetf, The story involves major players in the cryptocurrency world, but it concerns fragile and/or self-referencing balance sheets that are underpinned by reputation rather than sound capital structures.
In our view, this has a lot to do with the age-old game of weak, self-referencing balance sheets that are underpinned by reputation rather than sound capital structures, says Dueing. This feels like the Frankenstein of Enron and Lehman because of the unregulated nature of the crypto market, the decentralized structure of its players, and the lack of safety that comes with the kind of laws and regulations that most finance is subject to. It is only partially supported.
Unfortunately, this episode further eroded trust in cryptocurrencies. As you know, it takes years to build trust and seconds to lose it. More questions will arise regarding the balance sheets of stablecoins and other lenders, which we believe will reduce market liquidity and make lending terms unfavorable. These seem to be another case of “smartest person in the room” blinded by light. “
of US Securities and Exchange Commission FTX is also said to be investigating “abnormal trading of customer funds after a potential hack”, as it says it is currently investigating.
line mirror FTX General Counsel said in a tweet retweeted on the company’s Twitter account this weekend:
