According to court documents, FTX, the bankrupt cryptocurrency exchange, may have more than 1 million creditors and has been in contact with many regulators worldwide.
You would be surprised to know that the emerging cryptocurrency FTX is now equivalent to a bank run after experiencing a reduction in billions of dollars, and the exchange, which was previously one of the largest in the world, filed for bankruptcy protection last week, resulting in its CEO (Sam Bankman-Fried) and founder resigning.
After a few hours, the trading company revealed that uncertified gaining access resulted in disappearing funds and a big loss in cryptocurrency. According to crypto Analysts, hundreds of millions of dollars may have disappeared.
Reason For FTX Bankruptcy
Before the crash, Mr. Bankman-Fried was one of the stars of the cryptocurrency scene, comparing him to investment tycoon Warren Buffett with an estimated net worth of more than $15,000 million as recently as Monday. FTX had valued its assets between $10 billion and $50 billion and listed more than 130 affiliated companies worldwide.
But rumors earlier this week that FTX and other companies owned by Mr. Bankman-Fried were on shaky financial footing prompted many customers to try to withdraw funds from FTX.
Customers fled the exchange, fearing FTX lacked sufficient capital, and agreed to sell it to rival cryptocurrency exchange Binance. But the deal fell through pending Binance’s due diligence of the FTX balance sheet.
Faced with a liquidity crisis, Mr. Bankman-Fried attempted a bailout but failed, leaving FTX struggling to raise billions of dollars and many customers without access to their funds. His fortune was estimated recently at $23 billion, and he was a prominent political contributor to the Democrats.
Does It Also Affect My Bitcoin?
While the future of FTX is uncertain, any economic failure from this asset will have a restricted influence on the plan as this acquisition symbolizes less than 0.05 percent of our total net investments.
Bitcoin price fell below $17K on Friday morning, a level not seen since 2020, although Bitcoin price reached an all-time high of around $64K in late 2021
Cory Klippsten (Head executive of financial services firm) stated that People who own bitcoins should be fine keeping them off exchanges like FTX, which operate as a gambling site for crypto casinos(websites)
Cory Klippsten also said every exchange is a security risk. According to him, Some exchanges are more honorable, but the best way to save your bitcoin is to have full authority and check and balance over your digital assets.
As I said, Ftx Bankrupt has a drastic impact on many companies. The companies that have backed FTX are cutting back on their investments, and Bitcoin and other digital currency prices have fallen.
Politicians and regulators are calling for tighter surveillance of the sluggish industry. They offer a concept called cold wallet custodian, essentially a way to store assets offline without allowing for remote control. “Cold Wallet Custodian” now replaces many digital assets.