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FTX, the world’s second largest crypto exchange platform, valued at $32 billion (USD), was facing severe losses. The United States Securities and Exchange Commission (SEC) has started an investigation on how FTX manages the users’ funds and its crypto lending activities. Now the regulators are examining whether FTX maintained securities laws by keeping users’ crypto assets separate or whether it traded against the users.
The notification stated, “FTX is currently unable to process withdrawals. “We strongly advise against depositing.”
According to the reports, Sam Bankmman-Fried of Alameda purchased FTT tokens at a lower price. The entity waited a long time to increase the price of FTT tokens. After some days, Alameda started borrowing “real money” by using these highly inflated FTT tokens as collateral. FTT lost up to 90% of its value this week. It led Binance to pull out of the bailout deal with FTX.
Binance stated that there is no way to help FTX with the current legal actions by the US SEC. Binance said it was “beyond our control or ability to help.”
“Every time a major player in an industry fails, retail consumers will suffer. “We have seen over the last several years that the crypto ecosystem is becoming more resilient, and we believe that in time outliers that misuse user funds will be weeded out by the free market.”
Arthur Hayes, co-founder of BitMex, stated that it will be a difficult task to get a bail for the FTX, maybe it will take time for users to recover their frozen funds on the FTX platform. He further added that the major cryptocurrencies like Bitcoin, Ethereum, Solana may be affected due to their price surge.
“Not your keys, not your coins. Expect all exchanges to guard their clients’ capital closely. No more taking credit from so-called crypto prime brokers. No more polite phone calls to large traders to request a margin top-up. “No mercy liquidation.”
At the end of January 2022, FTX released data that shows the company completed a $400 million (USD) Services C fundraise, which resulted in increasing the valuation of the company by up to $32 billion (USD). At the mid of February 2022, the exchange’s FTX per day trading volume was $10 billion (USD). But the price of cryptocurrency shows a rate of decline in 2022, resulting in a reduction of the FTX network by up to $8 billion (USD).
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
