The saga of the FTX crypto exchange’s demise continues. According to insider information unearthed by Reuters, it turns out that the CEO Sam Bankman-Fried used at least $4 billion of FTX’s money this year to support his trading firm, Alameda Research, which is closely connected to FTX. And while we do not know the exact numbers, some of those $4 billion were customer deposits.
Reuters also learned that Alameda Research faced difficulties due to a series of bad business deals. Some of those deals are portrayed as a result of good intentions, as Bankman-Fried was looking to assist crypto companies suffering the crypto winter in May and June this year.
Notably, FTX had a loan agreement with the now-bankrupt crypto lender, Voyager Digital, worth $5 million. Following Voyager’s downfall, FTX paid $1.4 billion in an auction for its assets.
Last week, it was revealed in Alameda’s balance sheet that a large part of its $14.6 billion worth of assets was actually in FTT – FTX’s native token. This was a cause of worry for many, as FTX’s liquidity in large part wasn’t backed by independent assets such as fiat currency or other cryptos.
The famous Binance crypto exchange then promptly moved to liquidate its FTT holdings, which was followed by a wave of withdrawals.
This was too much for FTX. It appeared then that Binance might acquire the troubled crypto exchange, as the exchanges signed a non-binding letter of purchase intent. However, upon closer inspection, Binance’s CEO Changpeng Zhao decided to drop the acquisition.
According to Zhao, FTX is financially beyond saving and he’s also worried about regulators investigating it. Thus, from a company valued at $32 billion in January, FTX’s change of luck quickly led it to death’s door. It’s quite a turbulent industry we’re in.
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