Most recently, one of the biggest collapses in the history of the crypto industry has occurred. The crisis of the FTX exchange and FTT coin was caused by events since the beginning of November 2022. They uncovered facts that undermined the reputation of the company. In this article, we will try to understand what happened and what will be next with the FTX exchange and tell you how to buy a cryptocurrency at minimal risk.
On November 2, CoinDesk published an article about Alameda Research. It revealed that a significant part of the assets was the native token of the FTX exchange - FTT. The problem was the fact that FTX is a subsidiary of Alameda. The information greatly frightened market participants since the company must own not only its own assets but also those not directly related to it, such as stablecoins and cryptocurrencies of other companies.
According to CoinDesk, Alameda held $5.81 billion worth of FTT tokens out of a total capital of $14.6 billion (more than 1/3). After that, on November 6, the head of Binance, Changpeng Zhao, announced the sale of FTT tokens owned by the company. It was decided to dispose of the asset on the open market gradually. After that, on November 6, the head of SEO at Alameda offered to buy cryptocurrency FTT from Binance at $22 as soon as possible but was rejected.
The Collapse of FTX
The news caused the FTT rate’s drop. The token began to lose value from $22, reaching $15 in a day. The token has not been so cheap since January 2021. It caused an outflow of assets worth $1.2 billion from the FTX exchange. The cryptocurrency outflow created a lack of liquidity on the platform, which could not be covered by the $540 million influx made by FTX and Alameda.
After that, the head of the exchange, Samuel Bankman-Fried, asked Binance for help. On November 8, it was announced that Binance would buy the FTX exchange. The news provoked a new collapse of the FTT token rate by 72%, resulting in a new lowest mark of $3.59, according to CoinMarketCap. In two days, $6 billion was withdrawn from the exchange.
Five reasons to sell FTT:
- Lost reputation and user trust
- Low liquidity
- SEC initiated proceedings against Samuel Bankman-Fried (ex-CEO of the company)
- The exchange used client funds.
How to Buy and Sell Cryptocurrency?
When choosing a platform for storing and using your funds, be very careful and follow the latest news. Unlike FTX, WhiteBIT does not use client funds for its own benefit.