Major financial difficulties have hit one of the world’s leading crypto trading platforms. Sam Bankman-Fried, CEO of FTX also known as, SBF, has recently seen his net worth tumble by about $15 billion as his crypto exchange platform teeters on the edge of collapse.
Between the 8th and 9th of November, Bankman-Fried had a $991.5 million drop in wealth. That’s down from his prior estimate of $15.2 billion, a 94% decline, according to Bloomberg.
It was previously estimated that FTX was worth $32 billion. After a rival offshore cryptocurrency exchange, Binance, pulled out of a plan to purchase it and consumers withdrew almost $6 billion in cash, the firm filed for bankruptcy on November 11.
The implosion of FTX must be a wake up call for Congress and financial regulators to hold this industry and its executives accountable.
Too much of the crypto industry is smoke and mirrors. It's time for stronger rules and stronger enforcement to protect ordinary people.
— Elizabeth Warren (@SenWarren) November 11, 2022
What took place?
Changpeng Zhao, CEO of Binance and better known as CZ, reportedly invested in FTX in 2019 before selling his majority position in 2021. FTT, the native cryptocurrency granting access to the FTX trading platform, was used to compensate Zhao with almost $2.1 billion.
JUST IN: FTX US suspends withdrawals.
— Watcher.Guru (@WatcherGuru) November 11, 2022
Why does it matter?
According to Coindesk, a breach of Alameda Research, Bankman-crypto Fried’s trading business indicated that the company’s worth was highly dependent on the price of FTT.
Consequently, investors worried that FTX wouldn’t be able to pay its obligations when Zhao said on November 6 that his business would sell any remaining FTT it owned owing to “recent disclosures.”
Investors started pulling their money out, and the price of FTT dropped by 72% as a result. All of FTX’s assets leveraged off of FTT declined in value as FTT’s stock decreased.