FTX, the world’s fifth-largest virtual asset exchange in terms of transaction, has gone bankrupt. FTX’s debt is known to be worth 66 trillion won, and massive damage to users around the world is expected.
As overseas financial companies and companies are also known to have invested tens of billions to hundreds of billions of won in FTX, the repercussions of the incident are spreading to the financial and economic markets as well as the virtual asset market.
Last week was a tumultuous week with the FTX crisis. On November 7 (local time), rumors of FTX bankruptcy began to circulate in the virtual asset (cryptocurrency) community centered on Twitter.
⦁ “Let’s take out the money”.Cryptocurrency market fluctuates due to rumors of FTX bankruptcy
The confusion began with a report on CoinDesk’s virtual assets. It contains information that there may be a problem with FTX’s sister company Alameda Research’s ability to execute funds.
The main content of the report is that Alameda Research’s debt was found to exceed 54% of its assets, and that much of the assets were FTX tokens (FTT), so even the FTX exchange took the risk of insolvency.
On top of that, the FTX exchange withdrawal rush began as Chang Feng Zhao, CEO of Binance, said on Twitter that he had decided to liquidate all FTTs secured by FTX shares.
According to foreign media such as The Block and Coin Telegraph, stable coins withdrawn from FTX for one day on the 7th alone amounted to $451 million (about 628.3 billion won).
FTX asked Binance, the world’s No. 1 virtual asset exchange, to help prevent the situation from worsening. Changfeng Zhao, CEO of Binance, announced that he would acquire FTX and started to deal with the situation.
According to Cryptoslate on the 8th (local time), the estimated assets of FTX founder Sam Bankman Fried plunged 93% from $16 billion (KRW 21 trillion) to $900 million (KRW 1.2357 trillion) in one day. Fried, who ranked second in Forbes’ list of virtual asset billionaires in April this year, collapsed.
Chang Feng-jiao, CEO of Binance, mentioned the lesson of the incident, saying, “Don’t use self-issued tokens as collateral, and don’t borrow money or try to use capital efficiently, but have a lot of reserves.”
As it became known that Binance was taking over FTX, people thought the situation would end here.
However, the situation turned around sharply as Binance withdrew its acquisition of FTX. Binance announced on the 8th (local time) that it had begun due diligence on the company’s structure and financial status after announcing the acquisition of FTX and that it would withdraw its original offer a day later.
⦁ Into the fog of the cryptocurrency board…Binance Acquires FTX ‘Forgotten’
Binance was embarrassed to find a big problem with FTX’s financial status during the due diligence, the Wall Street Journal (WSJ) reported on the 9th, citing a source familiar with internal circumstances.