The first 12 days of November were probably the darkest days for 30-year-old Sam Bankman-Fried (SBF). Not only did he lose his crypto empire, but he went from being a Bitcoin billionaire and cryptocurrency white knight to filing for bankruptcy and owing money to his customers. At least $3 billion.
Over the next eight days, it became clear that SBF’s once-powerful cryptocurrency exchange, FTX, was not what everyone believed.
Here is a timeline of the events that led to FTX’s decline over the last 20 days.
beginning of the end
November 2: After crypto media CoinDesk, trouble began for management and his empire It was published A controversial report highlighting key details of the balance sheet of SBF trading firm Alameda Research. The article revealed that Alameda has invested heavily in FTT, the native token of his FTX exchange.
The report raised concerns because FTX and Alameda operated as separate entities, even though SBF created both companies.
Battle of two crypto giants
November 6th: Alameda Research CEO Caroline Ellison dismissed Concerns about the company’s balance sheet as rumors. According to her, CoinDesk’s report covered only a portion of Alameda’s balance sheet. She pointed out that the trading company has more than $10 billion in assets of hers, which is not reflected in the report.
Hours later, FTX’s main rival Binance announced The company had planned to liquidate all remaining FTT holdings acquired as part of its 2021 investment in FTX.
Binance CEO Changpeng Zhao (CZ) Said This decision is due to “recent revelations” about FTX. He later tweeted that his company would not support “people who lobby other industry players behind their backs” without naming FTX directly. However, speculators believe CZ is referring to his close ties with FTX and regulators, as well as some of SBF’s controversial tweets.
Ellison immediately offered to buy back Binance’s FTT holdings at $22 per token, mitigating the impact of the liquidation on the market. CZ later rejected the offer, saying his company wanted to remain on the free market.
Zhao too Confirmed As part of the liquidation process, an unknown wallet sent $584 million worth of FTT to Binance.
SBF: FTX is good, assets are good
November 7th: FTX’s Sam Bankman-Fried overshadowed CZ and Binance on Twitter after previously calling for peace and calling for CZ and others to “make love (and blockchain) instead of war.” continued.
he relieved The client added that FTX and the exchange’s assets are fine and that his company has more than $1 billion in excess cash. However, in the next few days it will become clear that nothing is wrong with FTX, at least when it comes to user deposits and investor money.
Without mentioning Binance, SBF said in a now-deleted tweet that competitors were targeting his company with a “hoax.”
Later that day, Zhao was denied After Ellison offered to buy back his stake in Binance FTT, the token price plummeted by 80% as investors began selling their token holdings.
FTX Stops Withdrawals, Binance Offers Relief
November 8th: Less than 24 hours after SBF tweeted that his assets were fine, reports confirmed that his exchange stopped processing user withdrawals. This was the first visible sign of FTX’s predicament since the debacle began on November 2nd.
A few hours later, Binance came to the rescue and there was a glimmer of hope for FTX. CZ tweeted that he had an exchange signed A non-binding agreement to purchase FTX after SBF asked for help.
The crypto market reacted positively to the news, but little did everyone know that love would not last. high-profile relief never will happen.
Binance Makes a U-Turn and Contagion Begins
November 9th: Many expected CZ’s next big announcement to be the completion of the acquisition, but Binance made a U-turn, walked away from trading. Zhao said his company realized after conducting “corporate due diligence” that FTX’s financial problems were beyond its “ability to control or assist.”
The news that Binance has canceled its FTX relief effort sent the entire crypto market into turmoil. FTT plunged further, Bitcoin fell below $16,000 for the first time since 2020, and SBF evaporated his 95% of net worth. lose his millionaire status.
A few hours later, the crypto industry began to see a knock-on effect from the FTX liquidity crisis. Considering his FTX and Alameda role in the Solana ecosystem, the Solana blockchain has been hit hard. Some cryptocurrency platforms later stop withdrawals, citing severe exposure to FTX.
Meanwhile, FTX’s legal and compliance teams resigned From exchanges before Binance withdraws from trading.
SBF apologizes and seeks investors
November 10th: With Binance eliminated as an option, SBF has had to look elsewhere for help, including reaching out to other rivals and cryptocurrency figures such as OKX and Tron founder Justin Sun. .
He also apologized On crypto Twitter, he admitted several mistakes, including failing to properly calculate FTX’s liquidity, leading to the company’s downfall.
SBF also vowed to complete FTX customers and was doing everything possible to increase liquidity, but could not make any promises about it. As part of this, Alameda Research has announced that it will cease trading.
Despite claiming that FTX’s US affiliate, FTX US, is “100% liquid” and has not been “financially impacted” by FTX’s liquidity crunch, the US exchange has since posted on its website that it would stop trading in the next few days.
“Trading on FTX US may be suspended in a few days.
Shortly after SBF’s tweet, on-chain data showed that FTX resumed withdrawals after a 48-hour outage.
SBF resigns and files for bankruptcy
Nov. 11: SBF could not find anyone to save his crypto empire, so his last move was resignation As CEO of FTX after filing for Chapter 11 bankruptcy protection for FTX, FTX US, Alameda Research, and approximately 130 affiliates.
John J. Ray III will succeed SBF as CEO, but the company says the former chief executive will remain to “assist in an orderly transition.”
Later in the day, crypto lending firm BlockFi suspended withdrawals, citing uncertainty surrounding the FTX liquidity crisis.
Recall that crypto lenders received a $250 million revolving credit facility from FTX in June during the first wave of the crypto winter sparked by the Terra crash.
Both sides in July agreed Having increased the credit line to $400 million, FTX has the option to acquire BlockFi for $240 million in the future.
However, with the downfall of FTX, lenders appreciated and dried up BlockFi. explore bankruptcy.
$477 million lost to regulatory intervention
November 12th: Within 24 hours of FTX filing for bankruptcy, $500 million Substantial amounts of assets have been suspiciously withdrawn from exchanges and accounts belonging to FTX US.Many speculate that hackers misused the company to steal funds, but later reported clearly that the Bahamas Securities Commission carried out massive withdrawals;
Later in the day, Bloomberg report SBF was interviewed by the Bahamas Police Department and securities regulators as part of the FTX investigation into criminal activity.
FTX Contagion Continues
November 13th: report It is revealed that the FTX crash also affected the company’s employees, as SBF and his inner circle promoted a crypto empire inside and outside the company.
According to information shared by employees, FTX employees were encouraged to invest in FTX stocks and FTT tokens to receive bonuses. Thus, employee funds were stored on the platform, and when the company sank, they lost access to their investments.
On the same day, the virtual currency exchange AAX stopped I did withdraw, but denied any exposure to FTX. The trading platform claimed the outage was due to a “third-party partner” doing a system upgrade, AAX later said some investors had withdrawn capital from the company due to his FTX hoopla. , said it was looking for new funds.
November 14th: More crypto businesses exposed to FTX started having liquidity problems.Cryptocurrency Broker Genesis Global Trading pause On Wednesday, the company announced withdrawals of loan units due to “abnormal withdrawal requests.”
Shortly after, cryptocurrency trading platform Gemini announced that it could no longer process withdrawals from its Earn program. Gemini and Genesis are business partners for lending products.
Including FTX’s Non-Crypto Partners visa NBA teams Golden State Warriors and Miami Heat have begun cutting ties with the exchange.
November 15th: Japanese cryptocurrency exchange Liquid Global, acquired by FTX, next suspended withdrawals. The platform said the move complies with FTX’s Chapter 11 bankruptcy filing in the United States.
Crypto lending platform SALT has also suspended withdrawals, citing significant exposure to FTX.
Serious Fraud and Improper Management of User Funds
November 16th: FTX Digital Markets Ltd., the Bahamas subsidiary of FTX submitted For US Chapter 15 bankruptcy protection.
November 17th: Court-appointed liquidator Quote Serious fraud in bankruptcy documents and mismanagement of user funds.
Further investigation into bankruptcy filing reveals a few things shocking details Issues with FTX include not properly logging user deposits, approving expenses with emojis via dead chat, and executives lavishing company funds on personal property. increase.
November 20th: FTX revealed Borrowed The 50 largest creditors have over $3 billion, with the top two single claims at $226 million and $203 million.
November 21: FTX Japan, the Japanese subsidiary of FTX, reportedly It plans to resume withdrawals by the end of the year.