On November 12th local time, Sam Bankman-Fried (SBF), founder of cryptocurrency exchange FTX, announced on social media that more than 130 affiliated companies (collectively known as FTX Group) including exchange FTX.com and related transaction company Alameda Research, have voluntarily filed for bankruptcy in accordance with US Bankruptcy Law Chapter 11 in order to "evaluate and cash assets in an orderly manner based on the interests of global stakeholders." Under U.S. law, companies that file for such bankruptcy can continue to operate when formulating debt repayment plans. The exchange has suspended its cryptocurrency withdrawal business. After the
news was released, Bitcoin fell by more than 5% at one point and fell below the integer of $17,000. As of press time, the price of Bitcoin is $16,804.
SBF also announced that it had resigned as CEO of FTX and was replaced by John J. RayIII, who also said that he would appoint Stephen Neal as the company's new chairman of the board of directors.
In bankruptcy filings obtained by the US media, FTX said it has more than 100,000 creditors, the company currently has assets between $10 billion and $50 billion and liabilities between $10 billion and $50 billion. "It is appropriate to file for bankruptcy under Chapter 11 of the Bankruptcy Act, which will provide FTX Group with a process to assess its situation and develop processes to maximize the protection of investors' interests."
But Lei also stressed: "FTX Group has valuable assets that can only be effectively managed through an organized joint process. I want to assure every employee, customer, creditor, contractor, shareholders, investors, government agencies and other stakeholders that we will do this work in a diligent, thorough and transparent manner. Stakeholders should understand that the incident has been developing rapidly and that the new team has only recently participated, and they should review the materials submitted on the litigation record form in the coming days for more information."
Crazy Financing , the road to rapid expansion of FTX
FTX is a digital asset derivatives exchange established in May 2019. Users can trade Bitcoin, Ethereum and other cryptocurrencies, as well as related derivatives. FTX completed a seed round of financing in August 2019, raising US$8 million, and blockchain investment funds Proof of Capital, Consensus Lab, FBG, Galois Capita and others participated in the investment.
In July 2021, FTX completed a US$900 million Series B financing, with the post-investment company valuation reaching US$18 billion, making it the largest financing in the history of the crypto industry. The company's total of more than 60 investors (invested) of this round of financing participated, including Sequoia Capital , SoftBank, Paul Tudor Jones Family Office, etc. FTX claimed at the time that this round was strategic financing, hoping to achieve a strategic layout of cooperation with investors in traditional markets through financing.
On January 31, 2022, FTX announced that it had completed a US$400 million Series C financing with a valuation of US$32 billion. Participants in this round include SoftBank, Paladin, Tiger Global Fund, and the Ontario Teachers’ Pension Plan Board.
In addition to FTX itself financing, FTX US, which provides services to US investors, also announced in January 2022 that it had completed a US$400 million Series A financing with a valuation of US$8 billion. This round of financing was participated by institutions such as Paladin, SoftBank Vision Fund Phase II, and Temasek . After the company gained a foothold in the United States, it began to expand globally. On March 7, 2022, FTX established its European subsidiary FTX Europe and obtained regulatory permission from the Cyprus Securities and Exchange Commission (CySEC) to provide European users with crypto derivatives trading services. On March 21, FTX established an Australian subsidiary FTX Australia, which has obtained Australian regulatory license to conduct business. On April 4, FTX completed the acquisition of Japanese crypto asset trading platform Quoine and its parent company Liquid, and provided products and services to Japanese customers. Why did
crash?
After strengthening cryptocurrency trading supervision in major countries around the world, cryptocurrencies represented by Bitcoin began to be adjusted at the end of 2021. Take Bitcoin as an example, it reached an all-time high of $68,580 in November 2021, and then fell all the way. The current price is less than $17,000. The decline in the past year exceeded 70%.
Similarly, the digital currency exchange, which provides a place for trading for cryptocurrencies, is also gradually falling into trouble.
According to the currency circle media CoinDesk, Alameda will be in bankruptcy crisis, and most of the assets in the balance sheet are FTT tokens issued by FTX. This news instantly triggered market panic, and FTT was sold on a large scale, causing FTX to fall into a liquidity crisis.
htmlOn November 9, Binance, the world's largest cryptocurrency exchange, originally planned to acquire FTX. But just one day after due diligence, Binance founder Zhao Peng publicly stated: "FTX's problems exceed our control and helping capabilities." At this point, the embattled FTX has entered the "Lehman moment" of a complete collapse.SBF Legend Life
According to Yahoo News, SBF was born in California, USA, and his father is a law professor at Stanford. From 2010 to 2014, SBF went to MIT in the United States, majoring in physics and minoring in mathematics. In an interview with Yahoo, he said the experience was not fulfilling, "What I learned in college ended up being useless except for social development. However, in terms of academics, it was all useless. The school didn't help most of the work. Everyone knows it's true, but some people really don't want to say it's true, but it's that."
During his time at MIT , he entered the famous hedge fund Jane Street Capital and started trading ETFs. After graduating from college, he stayed in the company and worked full-time there, mainly trading various types of ETF, futures , foreign exchange and stocks. He even designed an automatic OTC trading system for Jane Street Capital. After becoming familiar with the operation of the traditional financial system, he also observed the shortcomings of the cryptocurrency financial mechanism at that time (including the failure to provide leverage , liquidity issues, and quotation accuracy issues).
In 2017, he founded Alameda Research, a service company focusing on cryptocurrency quantitative trading , providing cryptocurrency exchanges with accurate quotation services, arbitrage, quantitative trading and other services. However, SBF is not satisfied with being a supporter of technology behind cryptocurrency exchanges. In 2019, he founded FTX.
is different from traditional cryptocurrency exchanges focusing on spot trading. FTX has targeted financial commodities derived from cryptocurrencies from the beginning and provides many targets that cryptocurrency exchanges currently do not have, such as leveraged tokens, equity tokens, forecast commodities, etc. During peak periods, FTX provided a total of 312 products, including spot trading, contract trading and pledge, and innovative products such as cryptocurrency index, leveraged tokens, and two-way option contracts.
not only crypto market itself, but FTX also transforms various political issues into transaction content, attracting people who were not interested in cryptocurrencies and traditional finance to invest. For example, FTX launched the futures contract TRUMP-2020 in February 2020. This contract allows investors to predict whether Trump will be re-elected to trade, helping FTX attract many people interested in politics to open accounts and trade. According to statistics, on November 4, the FTX futures contracts related to Trump and Biden had a single-day trading volume even exceeded US$10 million (currently, all election contracts, except for TRUMPFEB, have been settled according to the delivery rules of the original election).
Subsequently, his wealth increased exponentially, reaching US$26 billion at one point.
In 2021, SBF talked for the first time about how he quickly accumulates wealth in an exclusive interview with New York magazine. In 2018, he discovered Japan and South Korea, two markets that European and American investors ignored. At that time, a large number of Japanese and Korean users flocked to the cryptocurrency industry, and everyone rushed to buy Bitcoin, resulting in the price of Bitcoin in Japan being 10% higher than that of the United States, and South Korea even attracted sellers around the world to trade with a premium of 30% .
However, South Korea's strict currency entry and exit policy restrictions at that time made it quite difficult to convert the Korean won to the US dollar. SBF said he even considered buying a plane at that time and went to Seoul, the capital of South Korea to buy Bitcoins. But in the end, SBF decided to go to Japan and stayed in rural Japan with her partners for nearly a month, earning a premium profit every day . He said he had earned $25 million a day, saying it was the craziest trading moment he had ever experienced.
In an exclusive interview, SBF explained his life view to New York: making money is to donate money, which means that people should pursue a high-profit career so that they can donate more money to benefit society. So for him, making as much money as possible will be his biggest goal at the moment.
On May 23, 2022, SBF was selected for the 2022 "Top 100 Influential People in the World" list of Time magazine. SBF is also the only person in the crypto industry to be selected for the 100th era.
(The original title is "Avalanche in the currency circle! FTX Group filed for bankruptcy, the founder resigned! He once made crazy financing and expansion, why are he deeply trapped in the "Lehman Moment"?")
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