FTX has been in the news quite a bit recently, and not all of it good. The crypto exchange was founded by a young couple, who quickly grew their business into one that was worth billions of dollars. Shortly after this success however, the FTX bankruptcy scandal began to take place: investors lost money on their investments, some who had invested as much as $1 million in the company found themselves with little to show for it all but bad memories.
Before FTX bankruptcy scandal
Before the bankruptcy scandal, FTX was founded by Sam Bankman-Fried and his then-girlfriend Madeleine Probst, both former employees from Singapore’s Alameda Research. The exchange is registered in Antigua and Barbuda, with offices in San Francisco, California.
FTX’s main product is an online cryptocurrency trading platform that allows users to trade on margin (borrow money) or just place trades without borrowing funds (go long). It also offers access to a variety of cryptocurrencies through futures contracts tied to their prices. Users can make deposits or withdrawals via bank transfers or wire transfers, credit cards (VISA/MasterCard), debit cards (Visa Electron), PayPal and even Western Union payments.
FTX was founded by Sam Bankman-Fried and his then-girlfriend Madeleine Probst, both former employees from Singapore’s Alameda Research. The exchange is registered in Antigua and Barbuda, with offices in San Francisco, California.
The FTX story began when Sam Bankman-Fried and his then-girlfriend Madeleine Probst, both former employees from Singapore’s Alameda Research, founded the exchange in 2014.
The exchange is regulated by the Financial Services Commission of Antigua and Barbuda and has been awarded a license to operate as a Virtual Currency Service Provider (VSP) under their Money Laundering and Terrorist Financing Prevention Act.
FTX launched in May 2019 as a crypto derivatives exchange. FTX listed numerous different tokenized securities, giving investors exposure to companies such as Tesla (TSLA) and Apple (AAPL). The exchange has also been doing business in Hong Kong since 2019.
FTX listed numerous different tokenized securities, giving investors exposure to companies such as Tesla (TSLA) and Apple (AAPL). The exchange has also been doing business in Hong Kong since 2019.
To help expand its user base, the exchange made various partnerships, including one with Irish soccer team St Patrick’s Athletic FC, to have the exchange logo on their shirts. In April 2020, FTX sponsored the Miami Heat NBA basketball team for $135 million over three years.
FTX excessive spending
FTX sponsored the Miami Heat NBA basketball team for $135 million over three years, including a $50 million upfront payment. FTX was the first crypto exchange to enter a deal with the NFL. In April 2020, FTX sponsored St Patrick’s Athletic F.C., an Irish soccer team that plays in Ireland’s Premier Division.
To help expand its user base, the exchange made various partnerships, including one with Irish soccer team St Patrick’s Athletic FC, to have the exchange logo on their shirts. In April 2020, FTX sponsored the Miami Heat NBA basketball team for $135 million over three years.
FTX became the first crypto exchange to enter a deal with the NFL after last month announcing a four-year partnership with the Miami Dolphins. It is reported that FTX will pay up to $135 million for naming rights of Hard Rock Stadium. This comes months after the exchange announced being the shirt sponsor for Premier League team Southampton F.C.
FTX security breach
FTX, a Hong Kong-based crypto exchange that made headlines last month for agreeing to sponsor the Miami Dolphins NFL team, has been added to the growing list of companies affected by a $50 million hack. The exchange said in a statement that hackers stole more than $2 billion worth of its native FTX tokens.
To make matters worse, FTX’s operator is currently under bankruptcy protection and cannot pay back customers who lost money in this incident.
Bitfinex has also been targeted by hackers before, losing $72 million worth of BTC in 2016. At the time, the exchange said that it had “suffered a security breach which resulted in a loss of around 119,756 bitcoin” at current prices.
FTX bankruptcy scandal
FTX bankruptcy scandalThe Wall Street Journal claimed on Friday that FTX founder Sam Bankman-Fried sold a $300 million interest in the company when the cryptocurrency exchange raised money last year, citing the company’s financial records and people familiar with the transaction. The article also stated that at the time, Bankman-Fried informed investors that the payment represented a partial refund of the funds he had used to acquire rival Binance’s interest in FTX a few months prior.
According to the Journal, FTX raised $420 million in fundraising in October 2021 from a who’s who of well-known investors, including Temasek and Tiger Global, valuing the cryptocurrency exchange at $25 billion.
FTX’s founder against the legal system amidst the scandal
Legal experts claimed that the creator of FTX, Sam Bankman-Fried, who is facing increasing legal difficulties related to the failure of his cryptocurrency exchange, may have jeopardized his defense by speaking out recently.
In tweets and meetings with media, Bankman-Fried has criticized government regulations and attempted to explain why FTX crashed. Such statements, according to lawyers, will probably make it more challenging for the defense attorneys to handle the repercussions from the exchange’s failure and navigate numerous criminal probes.
In an interview with a Vox reporter that was published this week, Bankman-Fried profanely disparaged US regulators, expressed regret about his decision to file for bankruptcy, and blamed the failure of FTX in part on “messy accounting.” Later, he claimed he had not intended for anyone to hear the chat.
The failure of FTX is in part due to messy accounting – Sam Bankman-Fried
According to sources who spoke to Reuters, the US Justice Department, Securities and Exchange Commission, and Commodity Futures Trading Commission are currently looking into FTX. A class action lawsuit was launched on Tuesday against Bankman-Fried and others who pushed FTX by a group of cryptocurrency investors.
The FTX bankruptcy scandal is a big blow for the crypto industry. But it does not mean that we should be worried about the future of cryptocurrency. With more investors joining the crypto community every day, there will be plenty of opportunities for new exchanges to fill the void left by FTX and become successful businesses.
