After market turmoil brought down several companies in the space, Sam Bankman- Fried, the founder and CEO of FTX, was hailed as a hero by analysts. Some investors who were about to receive a rescue may be out of luck now that the exchange has filed for Chapter 11.
In September, FTX's US counterpart won an auction to buy the assets of the cryptocurrencies lender, which went bankrupt in July. The FTX US' bail out was supposed to give some relief to the customers of the company who faced the complete loss of their assets.
Customers would be able to recover about a third of their assets through a mix of cryptocurrencies and cash through the sale, according to a report. Bankman-Fried resigned as CEO of both companies after FTX and FTX US filed for Chapter 11.
There were doubts about the deal early in the week. Naik told Insider that he wasn't sure if the deal would go through. Naik said he hadn't received any updates on the deal.
Naik told Insider that they did not know what would happen there. Sam Bankman- Fried made a mistake. It is becoming clear.
FTX US is located in the Bahamas. The two companies have several investors in common.
Bankman-Fried owns a number of companies, including FTX and FTX US, as well as Alameda Research, which has assets tied up in FTX. Concerns were raised about the financial interdependence between FTX and Alameda. Some FTX customers had reported issues making withdrawals from their accounts.
Changpeng Zhao, the CEO of Binance, a rival exchange and early investor in FTX, said on Sunday that his company would sell off its holdings of FTT for $530 million. Many of the exchange's customers withdrew assets from their accounts because of the announcement.
FTX faced a shortage of liquid assets because of the rush of withdrawal requests. In July of this year, a similar phenomenon led to the demise of both Celsius and Voyager.
FTX's token plummeted between Sunday and Tuesday due to the panic among customers. FTX was facing a full-blown crisis on Tuesday when it was announced that it would be acquired by Binance. The next day, the deal fell apart.
According to Bankman- Fried, FTX only had 80% of the liquid assets customers withdrew on Sunday. FTX US was " 100% liquid" according to him. Both companies are going to file for Chapter 11.
FTX and Voyager Digital didn't reply to the request.
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