FTX, the second largest cryptocurrency exchange, fell, all in less than a week.
Morality dictates not to hit a man on the ground. An exception seems to exist in the world of cryptocurrencies. For a week now, the FTX platform has been living a nightmare with open eyes. It all starts on Tuesday 8 November with the publication of an article by the specialized media CoinDesk. He explains that the platform is in financial trouble and that if all clients want to withdraw their funds at the same time, FTX does not have the financial basis to meet this exceptional demand.
This announcement undermines the platform and a wind of panic is blowing across the cryptocurrency market. The FTT, the cryptocurrency of the house, is starting to crumble. As the day went by, everyone regained hope. Changpeng Zhao, big boss of Binance, the world’s number 1 cryptocurrency exchange platform, proposes a merger of the two companies.
A poisoned gift
He seems ready to make peace with Sam Bankman-Fried, the founder of FTX and his sworn enemy for a few weeks. But behind the hand held out by Zhao hides the dagger that will end FTX and its CEO. A few hours after proposing a merger, Binance withdraws its offer, saying FTX’s financial health is too fragile.
The announcement of Binance’s withdrawal completes the fall of FTX. The dark platform and Sam Bankman-Fried with it. Within 24 hours, the “Steve Jobs of crypto” lost $ 25 billion, the equivalent of Jamaica’s GDP. In a message posted on its social networks, “SBF” explained that it was putting all these companies into bankruptcy, as permitted by article 11 of the US constitution.
As if that wasn’t enough, Ryne Miller, one of the company’s executives, added a layer this weekend. He explains that people who still have FTX funds need to be withdrawn urgently.
He explains that FTX has been hacked and that the mobile application needs to be deleted from his phone. Things don’t seem to be getting any better on the brand’s website, which is infested with all kinds of computer viruses.
A war of egos
Already weakened by the CoinDesk revelations, Zhao’s announcement is pushing the troubled platform further and FTX is forced to file for bankruptcy late last week. Now it is possible to take (a little) perspective on the extent of the disaster. FTT, FTX’s in-house cryptocurrency fell more than 90% in less than 24 hours. The price of this virtual currency dropped from $ 24 to $ 3 in just one day.
For many people, the fall of the FTT has lost hundreds or even thousands of euros. SBF, the big boss of FTX was the first hit with an estimated loss of around $ 25 billion. In a long message on Twitter, SBF acknowledges his defeat and for him the culprit is all found. With his merger proposal immediately failed, Changpeng Zhao is responsible for the downfall of FTX.
Binance CEO did not see the arrival of a player like FTX. While the Binance Exchange solution remains by far the most used in the world (10 times more than FTX), the two businessmen didn’t like each other very much and both tried to harm each other.
In this fight, however, the big boss of Binance had a much more powerful weapon than his opponent. Thanks to the financial basis of his company, he was able to invest in the creation of FTX. As of November 7, the company had more than $ 2 billion worth of cryptocurrencies, including FTT, on the exchange.
As soon as CoinDesk’s shock article was released on Tuesday, Binance withdrew several hundred million dollars from FTX, plunging the company into the biggest (and last) crisis in its history. A beautiful tribute to Homer and his Trojan horse.
Gloomy FTX, Bitcoin takes a hit
Changpeng Zhao knocked down his opponent causing him to rot from the inside. A questionable method, but one that paid off, with FTX being wiped out within hours. But the struggle between these two men of power has third-party consequences. Away from this struggle, even Bitcoin, the standard bearer of the crypto universe, has suffered the violence of the fall of FTX.
The price of the most popular virtual currency in the world has dropped to $ 16,000. Bitcoin has never been lower since December 2020. Many players are now hoping this fall will lead to a market rebound. The price of the digital currency is currently showing no signs of recovery.