Cryptocurrency Platform FTX Files for Bankruptcy and Threatens to Cause a Contagion Effect

The worst ending was consummated this Friday for the FTX cryptocurrency buying and selling platform.

The Bahamas-based

has announced that it has filed for bankruptcy, and its founder and CEO, 30-year-old Californian Sam Bankman-Fried, has resigned from him.

The organization had been suffering from a liquidity crisis for days that had caused a massive withdrawal of funds by its clients, and although it was looking for a buyer to get it out of trouble, finally nobody wanted to take the risk of rescuing an entity on the brink of collapse. collapse.

The decision implies that FTX, Alameda Research and some 130 subsidiaries of the group will take refuge in bankruptcy legislation (the so-called Chapter 11 in the United States) to try to get the maximum possible return on the assets available to them.

The collapse of one of the main platforms in the sector leaves the funds of around a million users up in the air, and can have important consequences for the already very affected universe of cryptocurrencies.

Many other firms had exposure to FTX, so it is not ruled out that it could cause a cascade effect.

In fact, BlockFi, which FTX rescued with a loan, has already announced that it freezes withdrawals due to the crisis of its benefactor.

Bitcoin reacted as soon as the news was known with sharp falls, greater than 6%, and was exchanged for $16,500, close to annual lows.

And ethereum, the second in importance, lost a similar percentage to 1,200 dollars.

The collapse of FTX, founded in 2019, is also the twilight of its creator, Sam Bankman-Fried, a Physics graduate from the Massachusetts Institute of Technology (MIT) who built his fortune operating with bitcoins and had created an entire empire thanks to the intermediation of purchases and sales of cryptocurrencies.

His fortune has gone from 16,000 million dollars to practically zero in just a few days.

Like his influence: he was one of the biggest donors to political campaigns, especially to the Democratic Party.

According to the statement, Bankman-Fried will now help transition the company's leadership to John J. Ray III.

“The immediate Chapter 11 relief is appropriate to provide the FTX Group with an opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” Ray said.

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The broken dreams of Luna, the cryptocurrency that collapsed in three days: "It seemed like a safe bet"

The week has been a roller coaster of emotions for FTX.

At first, Binance, the world's largest cryptocurrency platform, announced that it would take over the purchase, a way to avoid turmoil throughout the sector.

Bankman-Fried even thanked Binance for coming to his rescue.

But hours later all that vanished: after studying the company's books, he discarded the operation.

FTX was alone and everyone wanted to get their money.

In that environment, no one has dared to grab the knife in full fall for fear of cutting themselves.

In addition to the liquidity problems it suffered, there was also the investigation opened by the US regulator (the SEC), due to suspicions that FTX could use money from its clients in high-risk irregular operations.

The bankruptcy of FTX is one more slab on the attempt of cryptocurrency companies to gain the trust of small and large investors.

This year, in the midst of the so-called

that has pushed back the price of bitcoin and other digital currencies, firms such as Luna, Celsius or Three Arrows Capital also collapsed, leaving their clients with heavy losses.