FTX Crash Wiped Out Nearly $1 Billion Investor Assets
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The collapse of FTX, one of the largest cryptocurrency exchanges, is reverberating around the financial world as investors reportedly lost nearly $1 billion in assets. The company filed for Chapter 11 bankruptcy. Astrid Martinez has more, in the video published on Nov. 12, 2022, by CBS Evening News, as “FTX’s collapse wipes out nearly $1 billion in investor assets“, below:
The developing story of FTX and Sam Bankman-Fried is playing out like a Netflix documentary with each day being a new episode in real time. Crypto Twitter has alleged that Sam Bankman-Fried was on the run and tried to flee to South America. Others believed he tried to flee to Dubai. Cointelegraph reported that Bahamian authorities have Bankman-Fried and 2 other executives “under supervision.” Reuters reported that they reached out to SBF to ask him via text if he left the Bahamas. He said “Nope”. After lying to his followers continually on Twitter about anything pertinent to FTX, it would be very hard to imagine him answering “Yes, I’m on the run”. More and more high-level people are sharing their experiences with SBF and looking back for any red flags, and what they might have missed. Elon Musk took to Twitter to confirm a story about SBF investing $3 Billion into Twitter. Elon said that SBF set off his BS detector. As a guest on the All-In podcast, Brian Armstrong also suggested something was off when he compared Coinbase’s revenues to that of FTX but for whatever reason, SBF had substantially more cash for donations, corporate buyouts, etc.. being heralded in the media as the ‘White Knight’ of Crypto. In his all-in podcast, Chamath Palihapitiya also shared his own experience with Bankman-Fried, but instead of focusing on SBF, Chamath went deeper into the subject and believes there’s a systemic issue at hand that needs to be dealt with immediately. Chamath Palihapitiya is a Sri Lankan-born Canadian and American venture capitalist, engineer, SPAC sponsor, founder and CEO of Social Capital. Palihapitiya was an early senior executive at Facebook, working at the company from 2007 to 2011. Following his departure from Facebook, Palihapitiya started his fund, The Social+Capital Partnership, through which he invested in several companies, including Yammer and Slack. He is a co-host of technology podcast All In. Chamath has an estimated net worth of around US$1.2 billion, ranking him 2,378th in the Forbes list of Billionaires 2021, in the video published on Nov. 13, 2022, by Only The SAVVY, ““This Collapse Is Way Bigger”|Chamath Palihapitiya Reacts to FTX”, below:
For better understanding of what happened, please refer to the excerpt from wikipedia, in italics, below:
Samuel Bankman-Fried (born March 6, 1992), also known by his initials SBF, is an American entrepreneur, investor and former billionaire. He is the founder and former CEO of FTX, a cryptocurrency exchange, FTX.US, its U.S. affiliate, and Alameda Research, a quantitative cryptocurrency trading firm. FTX experienced a solvency crisis in late 2022, which led to a collapse in FTX’s native cryptocurrency, FTT. Amid the crisis, Bankman-Fried announced he would wind down operations at Alameda Research and resigned as CEO of FTX, which filed for Chapter 11 bankruptcy.
Bankman-Fried’s net worth peaked at $26 billion. In October 2022, he had an estimated net worth of $10.5 billion. However, on November 8, 2022, amid FTX’s solvency crisis, his net worth was estimated to have dropped 94% in a day to $991.5 million, according to the Bloomberg Billionaires Index, the largest one-day drop in the index’s history. By November 11, 2022, the Bloomberg Billionaires Index considered Bankman-Fried to have no material wealth. Before Bankman-Fried’s wealth eroded in November 2022, Bankman-Fried was a major donor to the Democratic Party and many left-wing political causes. He was the second-largest individual donor to Joe Biden in the 2020 election cycle, personally donating $5.2 million, and donated $40 million to the Democratic Party during the 2022 US midterms elections.
Solvency crisis at FTX
In November 2022, Binance CEO Changpeng Zhao revealed on Twitter that his firm intended to sell its holdings of FTT, FTX’s token. Binance received FTT as part of a sale of its equity in FTX in 2021. Zhao published his tweet soon after a report from CoinDesk stating that the bulk of the holdings of Alameda, Bankman-Fried’s quantitative trading firm, were in FTT. Bloomberg and TechCrunch reported that any sale by Binance would likely have an outsize impact on FTT’s price due to the token’s low trading volume. The announcement by Zhao of the pending sale and disputes between Zhao and Bankman-Fried on Twitter led to a decline in the price of FTT and other cryptocurrencies. Zhao had been critical of Bankman-Fried’s lobbying efforts.
On November 8, Zhao announced that Binance had entered into a non-binding agreement to purchase FTX due to a liquidity crisis at FTX. Zhao further announced on Twitter that the company would complete due diligence soon, adding that all crypto exchanges should avoid using tokens as collateral. He also wrote that he expected FTT to be “highly volatile in the coming days as things develop”. On the day of the announcement, FTT lost 80 percent of its value. On November 9, the Wall Street Journal reported that Binance was walking away from the FTX acquisition. Binance cited reports of FTX’s mishandling of customer funds and pending investigations of FTX as the reasons the firm would not pursue the deal. Amid the crisis, Bankman-Fried was no longer a billionaire, according to the Bloomberg Billionaires Index. The same day, the FTT token’s price fell more than 80 percent in 24 hours.
Also on November 9, Bloomberg reported that the Securities and Exchange Commission and Commodity Futures Trading Commission were investigating FTX and the nature of its connections to Bankman-Fried’s other holdings.
Anonymous sources cited by Reuters stated that Bankman-Fried had transferred at least $4 billion from FTX to Alameda Research, without any disclosure to insiders or the public, earlier in 2022. The sources said that the money transferred had included customer funds, and that it was backed by FTT and shares in Robinhood. An anonymous source cited by the Wall Street Journal stated that Bankman-Fried had disclosed that Alameda owed FTX about $10 billion which were secured through customer funds stored in FTX when FTX had, at the time, $16 billion in customer assets. According to anonymous sources cited by the Wall Street Journal, the Chief Executive of Alameda Research Caroline Ellison told employees that Bankman-Fried was aware that FTX had lent its customers’ money to Alameda to help it meet its liabilities.
Bankman-Fried resigned as CEO of FTX on November 11 and was replaced by John J. Ray III, the same day FTX and related entities filed for bankruptcy in Delaware.
Cryptocurrency exchange FTX has filed for bankruptcy as its CEO steps down. NBC tech correspondent Jake Ward talks about what it means for you, even if you’re not invested in crypto, in the video published on Nov. 12, 2022, by MSNBC, as “Breaking Down The FTX Collapse“, below:
In the video published on Nov. 13, 2022, by Chris Norlund, as “FTX Crash| Where SBF Put the Money“, below:
Kevin O’Leary, O’Shares Investments chairman and ‘Shark Tank’ investor, joins ‘TechCheck’ to discuss O’Leary’s investment in FTX, what he needs to see before he commits to more investment in the space and more, in the video published on Nov. 11, 2022, by CNBC Television, as “There won’t be another situation like FTX for institutional investors ever again, says Kevin O’Leary“, below:
Why is cryptocurrency crashing? What is the most reliable crypto exchange? Sam Bankman-Fried arrest?! Let’s discuss the latest crypto news for bitcoin, ethereum, altcoins, & MORE! SLAP THE LIKE BUTTON! In the video published on Nov. 13, 2022, by Alticoin Daily, as ““FTX is GOing to WIPE OUT the Crypto Market!” | CZ Binance Warns of NEXT Exchange to Collapse”, below:
One of the world’s largest crypto exchanges says it is investigating hundreds of millions of dollars of unauthorised withdrawals. Analysts say millions of dollars worth of assets, have been moved from the platform. FTX filed for bankruptcy on Friday. It says it wants legal protection as it looks for ways to return money to customers. Crypto prices have been sliding all year, but the collapse of FTX stands out. So, what does this collapse mean for investors – and the industry? In the video published on Nov. 13, 2022, by Al Jazeera English, as “What future do cryptocurrencies have after the fall of FTX?| Inside Story“, below:
Sam Bankman-Fried Claims FTX Still Solvent | Kalkine Media Samuel Bankman-Fried the former CEO of collapsed crypto exchange, FTX, has claimed the company is still solvent despite bankruptcy been put in place. Despite FTX still owing customers US$8 billion, (1)SBF took to Twitter overnight insisting FTX still has US$9 billion of liquidity and semi-liquid holdings, in the video published on Nov. 16, 2022, by Kalkine Media, as “Sam Bankman-Fried Claims FTX Still Solvent| Kalkine Media“, below:
Gathered, written, and posted by Windermere Sun-Susan Sun Nunamaker More about the community at www.WindermereSun.com
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