A Timeline of FTX’s Collapse

The primary twelve days of November had been maybe the darkest for 30-year-old Sam Bankman-Fried (SBF), as he not solely misplaced his crypto empire however went from being a Bitcoin billionaire and crypto’s white knight to submitting for chapter and owing clients no less than $3 billion.

The following eight days revealed that SBF’s once-powerful crypto change FTX was not what everybody believed it to be.

Right here’s the timeline of the occasions that led to the autumn of FTX within the final 20 days.

The Starting of the Finish

Nov 2: Troubles began for the exec and his empire after crypto media CoinDesk revealed a controversial report highlighting vital particulars within the steadiness sheet of SBF’s buying and selling agency Alameda Analysis. The article revealed that Alameda is closely invested in FTX’s change’s native token, FTT.

The report raised considerations as FTX and Alameda operated as separate entities although SBF created each companies. 

The Battle of Two Crypto Giants 

Nov 6: Alameda Analysis CEO Caroline Ellison dismissed considerations in regards to the agency’s steadiness sheet as rumors. In keeping with her, the Coindesk report solely coated a subset of Alameda’s steadiness sheet. She famous that the buying and selling agency had greater than $10 billion of property that didn’t mirror within the report.

A few hours later, FTX’s main rival Binance introduced it deliberate to liquidate all of its remaining FTT holdings, which the corporate had acquired as a part of its 2021 investments in FTX. 

Binance CEO Changpeng Zhao (CZ) stated the choice stemmed from “latest revelations which have come to gentle” about FTX. He later tweeted that his firm wouldn’t help “individuals who foyer in opposition to different business gamers behind their backs,” with out straight naming FTX. Nonetheless, speculators imagine CZ was referring to FTX’s shut ties with regulators and a few of SBF’s controversial tweets. 

Ellison rapidly supplied to purchase again Binance’s FTT holdings for $22 per token to scale back the influence of the liquidation in the marketplace. CZ would later reject the supply, saying his agency prefers to remain within the free market.

Zhao additionally confirmed the switch of $584 million value of FTT from an unknown pockets to Binance as a part of the liquidation course of. 

SBF: FTX is High quality, Belongings Are High quality

Nov 7: FTX’s Sam Bankman-Fried continued throwing shades at CZ and Binance on Twitter after he beforehand known as for peace and requested that CZ and others ought to “make love (and blockchain), not struggle.”

He reassured clients that FTX and property on the change had been high quality, including that his firm had greater than $1 billion in extra money. However the subsequent few days would reveal that nothing was ever high quality with FTX, no less than not customers’ deposits and traders’ cash. 

With out mentioning Binance, SBF stated in a now-deleted tweet {that a} competitor was going after his firm with “false rumors.”

Later that day, Zhao rejected Ellison’s supply to purchase again Binance FTT holdings, and the token’s worth plunged 80% as traders started to promote their very own. 

FTX Halts Withdrawals, Binance Gives Bailout

Nov 8: Lower than 24 hours after SBF tweeted that property had been high quality, studies confirmed that his change had stopped processing customers’ withdrawals. That was the primary seen signal of FTX’s predicament because the fiasco began on Nov 2. 

A few hours later, FTX noticed a ray of hope as Binance got here to the rescue. CZ tweeted that his change had signed a nonbinding settlement to buy FTX after SBF requested for assist. 

The crypto market reacted positively to the information, however little did everybody know that the love wouldn’t final and the high-profile bailout would by no means occur.

Binance Makes U-Flip, Contagion Units In

Nov 9: Whereas many individuals had been anticipating CZ’s subsequent massive announcement to be the completion of the takeover, Binance made a u-turn and walked away from the deal. Zhao stated his firm realized FTX’s monetary hassle was past its “management or potential to assist” after conducting “company due diligence.”

Information about Binance’s choice to again out of its FTX rescue mission despatched your entire crypto market into chaos. FTT crashed additional, bitcoin dropped beneath $16,000 for the primary time since 2020, and SBF noticed 95% of its web value evaporate, dropping his billionaire standing. 

Just a few hours later, the crypto business began seeing the chain response from FTX’s liquidity crunch. The Solana blockchain took a big hit, contemplating the position of FTX and Alameda within the Solana ecosystem. A number of crypto platforms will later halt withdrawals, citing extreme publicity to FTX. 

In the meantime, FTX’s authorized and compliance workforce reportedly resigned from the change earlier than Binance pulled out of the deal.  

SBF Apologizes, Hunts for Buyers

Nov 10: With Binance not an possibility, SBF needed to search for assist elsewhere, together with reaching out to different rivals and crypto figures equivalent to OKX and Tron’s founder Justin Solar. 

He additionally apologized on crypto Twitter, the place he admitted a number of errors, together with failing to calculate FTX’s liquidity correctly, which led to the corporate’s downfall. 

SBF additionally vowed to make FTX clients complete, noting that he was doing the whole lot attainable to boost liquidity however couldn’t make guarantees about that. He then revealed that Alameda Analysis would halt buying and selling as a part of an effort to rescue FTX.

Regardless of claiming that FTX US, the American affiliate of FTX, was “100% liquid” and was not “financially impacted” by FTX’s liquidity crunch, the U.S. change later posted on its web site that it will droop buying and selling inside the subsequent few days. 

“Buying and selling could also be halted on FTX US in just a few days. Please shut down any positions you wish to shut down. Withdrawals are and can stay open,” the web site acknowledged.

Shortly after SBF’s tweets, on-chain information confirmed that FTX had resumed withdrawals after 48 hours of suspending the service. 

SBF Resigns and Information for Chapter

Nov 11: SBF couldn’t discover anybody to rescue his crypto empire, so his final transfer was to resign as FTX CEO after submitting for Chapter 11 chapter safety for FTX, FTX US, Alameda Analysis, and about 130 affiliated corporations. 

Though John J. Ray III changed SBF as CEO, the corporate stated the previous chief will stay to “help in an orderly transition.”

Later that day, crypto lending agency BlockFi halted withdrawals, citing uncertainty surrounding FTX’s liquidity disaster. 

Recall that the crypto lender acquired a $250 million revolving credit score facility from FTX in June through the first wave of the crypto winter that stemmed from Terra’s crash. 

In July, each events agreed to boost the credit score facility to $400 million, with FTX having the choice to amass BlockFi for $240 million sooner or later. 

Nonetheless, FTX’s downfall has left BlockFi excessive and dry, with the lender exploring chapter.

$477M Goes Lacking as Regulators Step In

Nov 12: Lower than 24 hours after FTX filed for chapter, about $500 million value of property had been suspiciously withdrawn from the change and accounts belonging to FTX US. Many speculated that hackers exploited the businesses to steal the funds, however studies later revealed that the Securities Fee of the Bahamas executed large withdrawals. 

Later that day, Bloomberg reported SBF was interviewed by the Bahamas police and securities watchdog as a part of an investigation into FTX for legal misconduct.

FTX Contagion Continues

Nov 13: Experiences emerged that the FTX crash additionally affected the corporate’s staff as SBF and his internal circle promoted the crypto empire internally and externally. 

In keeping with data shared by an worker, FTX staff had been inspired to take a position and obtain their bonus in FTX inventory and FTT tokens. Thus, staff’ funds had been saved on the platform, and when the corporate sunk, they misplaced entry to their investments. 

That very same day, crypto change AAX halted withdrawals however denied any publicity to FTX. The buying and selling platform claimed the suspension was resulting from a “third-party companion” present process a system improve. AAX later famous that it’s in search of new funding as a few of its traders withdrew their capital from the corporate because of the FTX saga.

Nov 14: Extra crypto companies with publicity to FTX began having liquidity points. Crypto brokerage agency Genesis World Buying and selling paused withdrawals for its lending unit resulting from “irregular withdrawal requests,” the corporate introduced Wednesday. 

Shortly after, crypto buying and selling platform Gemini introduced that it might not course of withdrawals from its Earn program. Gemini and Genesis are enterprise companions within the lending product. 

FTX’s non-crypto companions, together with Visa and NBA groups Golden State Warriors and Miami Warmth, began reducing their ties with the change. 

Nov 15: FTX-acquired Japanese crypto change Liquid World was subsequent in line to pause withdrawals. The platform stated the transfer was in compliance with FTX’s Chapter 11 chapter submitting in the USA. 

Crypto lending platform SALT additionally halted withdrawalс, citing important publicity to FTX. 

Severe Fraud and Mismanagement of Customers’ Funds

Nov 16: FTX’s Bahamas entity, FTX Digital Markets Ltd., filed for Chapter 15 chapter safety in the USA.

Nov 17: Court docket-appointed liquidators cited critical fraud and mismanagement of customers’ funds within the chapter doc. 

Additional examination of the chapter submitting revealed some stunning particulars about FTX, together with not correctly recording customers’ deposits, approving bills with emojis by way of disappearing chats, and executives lavishing company funds on private property. 

Nov 20: FTX revealed that it owed 50 of its greatest collectors over $3 billion, with the 2 prime largest single claims being $226 million and $203 million.

Nov 21: FTX Japan, the Japanese subsidiary of FTX, is reportedly planning to renew withdrawal by year-end. 

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