The cryptocurrency house of cards loses another card with the bankruptcy of FTX. Last Friday the 11th, the cryptocurrency exchange company declared bankruptcy and its CEO, Sam Bankman-Fried, resigned from his position.
Such is the situation within this financial world that this same company offered in May to rescue other bankrupt companies and now it is the one that has been about to be rescued by its competitor Binance, which has finally decided not to absorb FTX .
Both companies are the most important cryptocurrency exchange houses and the ones that handled the largest number of transactions.
It could be argued that one of the causes of FTX's downfall is “the total failure of corporate controls”, says the new CEO, John J. Ray III. The company reached the point of allocating the funds from the platform to buy houses for employees and managers, something that shows the existing mismanagement. This bankruptcy has been one of the hardest blows to the cryptocurrency market.
Poor internal controls, problems with the firm's record-keeping, faulty regulatory oversight abroad, and mismanagement of responsibility in small and inexperienced groups, are just some of the reasons that have triggered one of the most important falls in the history of this market.
All these wrong practices and decisions that were repeated over and over again were led by Sam Bankman-Fried. With the arrival of the new executive, an expert in restructuring who already supervised the liquidation of Enron, all these practices that have caused the fall have come to light.
Ray III has already started his mission to find the financial resources of FTX, both cash and cryptocurrencies. He has already made $740 million, a small part of the losses, but is being hurt by the former chief executive's "incessant and disturbing tweets."
An internal investigation that is revealing surprising information about the previous address. FTX "did not maintain centralized control of its cash," did not analyze the creditworthiness of its partners, and did not have an accurate list of bank accounts and signatories. The current leader of the company is running into problems to see the records of decision-making, since messaging applications that auto-delete the content after a short time were used.
Last November 2 was when the clouds of bankruptcy began to settle over FTX. The CoinDesk publication revealed that a Bankman-Fried hedge fund called Alameda Research had a suspicious amount of FTT, the FTX tokens.
Yesterday it was learned that the former manager and two other executives received loans worth 4,100 million from his affiliated commercial arm, Alameda Research. Which suggested that there was a very close financial relationship between these independent companies.
As a result of this information, the competing company, Binance, which also had FTT, announced that it was selling them due to “recent revelations”. From there, the value of the cryptocurrency plummeted, causing problems in withdrawals that amounted to 6,000 million, which it has not been able to face due to lack of liquidity.
