Sam Bankman-Fried, the CEO of FTX, resigns after the exchange filed for Chapter 11 bankruptcy protection due to fund mismanagement that caused the price of cryptocurrencies to fall.
The FTX Cryptocurrency Exchange Files for Bankruptcy
The bankruptcy filing of FTX CEO Sam Bankman-Fried last week sent the crypto market into a tailspin. Investors in the cryptocurrency market exchange were shocked to learn that FTX, whose worth was about $32 billion just a few days ago, had filed for Chapter 11 bankruptcy protection.
From $25 on November 7, 2022, to $2.71 on November 9, 2022, FTT prices experienced a dramatic decline. The FTX exchange's native token is called FTT.
One of the biggest cryptocurrency exchanges with a substantial user base is FTX. FTX and its sister company Alameda Research are both managed by Bankman-Fried. According to allegations, Bankman-Fried exploited customer deposits, which caused FTX to go bankrupt. From a lifetime high of $68,000 in November of last year to $16,000 in November of 2022, bitcoin values have fallen. The price of BTC is currently at a two-year low.
Bankman-Fried Resigns as CEO of FTX
Sam Bankman-Fried, the CEO of the FTX bitcoin exchange, has requested bankruptcy protection. Although he resigned as CEO, he will still support the business as it pursues bankruptcy protection.
One of the top figures in the cryptocurrency sector is Bankman-Fried. The 30-year-old entrepreneur is also among the top financial backers of the American Democratic Party. The CEO of FTX has generously donated to the Democrats. Additionally, Bankman-Fried contributed to the 2020 US presidential elections, which Joe Biden won. In the most recent elections, he also contributed to the victories of Democratic candidates Peter Welch and Robert J. Menedez.
The CEO of Binance, another well-known cryptocurrency exchange, is Changpeng Zhao. Following his announcement that he will sell $530 million worth of FTT cryptocurrency tokens, a number of investors withdrew their funds in an effort to reduce their exposure to the cryptocurrency market. After CEO Zhao's announcement on Friday, investors made a hasty withdrawal of nearly $5 billion in investment funds. The worst affected cryptocurrencies were popular ones like Bitcoin and Ethereum. Meme coins adopted the same strategy.
Since FTX declared bankruptcy, John J. Ray III has taken over as CEO. As Sam Bankman is leaving the company, he will take over and become the new leader.
Terra Luna, Celsius Network, Three Arrows Capital, and Voyager Digital are recent examples of similar institutions that have failed. Another cryptocurrency exchange that has stopped allowing user withdrawals is BlockFi. It has increased regulatory authorities' worry about the collapse of significant enterprises in the cryptocurrency market.
Investors suffered a significant loss when the cryptocurrency market abruptly crashed, losing the majority of their wealth. During the pandemic, a lot of new investors entered the cryptocurrency market. When investing in cryptocurrencies, investors get good returns. The fragility that surrounds regulatory efforts in the crypto market, however, is made apparent by the most recent meltdown in the cryptocurrenc market.
To safeguard consumers who have invested substantial sums of money in the crypto market, the business needs rigorous enforcement of rules. Consumer investments are being destroyed by the sharp price swings.
The SEC has begun to investigate the FTX trading programs. Leading organizations that look into frauds that defraud investors include the CFTC and SEC. FTX and Alameda's failures have scared away some cryptocurrency investors.
Update on cryptocurrency prices
Last week, the market capitalization of cryptocurrencies fell by 24% to a low of $770 billion. However, following the panic sell, it regained 16%.
The largest losers were Bitcoin and Ethereum. The price of BTC and ETH fell on Friday after FTX declared it will start bankruptcy procedures. The price of cryptocurrencies crashed as a result. One of the most well-known figures in the cryptocurrency industry is Sam Bankman, and the bankruptcy news rocked the industry.
Last week, bitcoin values dropped to a level below $16,000. On November 9 and 10, BTC prices reached a high of $15,600 for two days. Over 22% of Bitcoin's value dropped last week. The price of bitcoin increased to trade above $16,500. Bitcoin fell to $15,700 before bouncing back to reach $16,800. BTC was priced at $69,000 in 2021.
The second-largest cryptocurrency, ETH, rebounded from a recent low of $1,076 to reach 1,272.
Prices for MATIC moved erratically last week. Due to investors dumping the MATC prices on the FTX hoax, it lost about 32% in just two days.
The crypto slide also included meme coins. Prices for DOGE dropped to $0.0706 before rising to $0.0930.
Another factor contributing to the current downturn in the cryptocurrency market is high inflation in developed nations. As inflation affects the economies of major nations, pressure is mounting on digital assets. The cryptocurrency market is extremely volatile, and experts believe that values may drop even further in the coming days.
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