The FTX bankruptcy shocked everyone in the cryptocurrency industry after the company filed for asset disruption in November.
By information included in court documents, BitGo was able to recover $740 million in assets. The sum is only a portion of what is missing. The location of the significant number of assets is still unknown.
FTX Bankruptcy Puts Investors to Severe Challenges
Amid FTX’s liquidity crunch problems, Chanpeng Zhao had consented to a non-binding letter of intent to buy the company. After agreeing to purchase FTX for 24 hours, Binance canceled the deal. Mismanagement of client funds suspected US government inquiries, and business due diligence was given as the justifications.
The current problem is that it would take a long time for FTX investors to recoup their platform investments. The collapse of the second-largest cryptocurrency exchange at the time shocked the whole industry. Sam Bankam-Fried and FTX are being looked into for potential security infractions both domestically and overseas. A few days after the company declared bankruptcy, Bahamas security regulators took some of FTX’s cash into custody.
After Bankman-Fried asked the company for $8 billion to back up its customer’s crypto assets, the issues related to FTX’s liquidity crunch” became apparent.
After experiencing the virtual equivalent of a bank run, the troubled cryptocurrency exchange, short billions of dollars, filed for bankruptcy. On Friday morning, FTX, the hedge fund Alameda Research, and numerous other connected businesses filed a bankruptcy filing in Delaware. The company also filed for bankruptcy, even though FTX US had not previously been anticipated to be part of any financial rescue.
Sam Bankman Fried, the company’s CEO, and founder has left. According to recent estimates, Bankman-Fried is worth $23 billion and has made significant contributions to Democrats’ political campaigns. Forbes and Bloomberg, who constantly monitor the net worths of the world’s wealthiest people, claim that his net worth has virtually vanished.
Former FTX CEO Sam Bankman-Fried Being Investigated
There are further issues with Bankman-Fried. According to a source with knowledge of the situation, the Securities and Exchange Commission and the Department of Justice are investigating FTX to see if any securities crimes or criminal behavior was committed.
The individual talked under the condition of anonymity because they were not permitted to disclose inquiry specifics in public. FTX cited more than 130 linked firms spread out around the world in its bankruptcy declaration.
The corporation estimated the value of its obligations to be between $10 billion and $50 billion. John Ray III, a seasoned bankruptcy litigator best known for having to clear up the wreckage left behind by Enron’s failure, was named the company’s new CEO.
After the letter was published, bitcoin fell and is now trading under $17,000. Before this week’s disclosure of FTX’s issues, when the original cryptocurrency had been circling around $20,000 for months, bitcoin momentarily fell to roughly $15,500.