When The Futures Exchange (FTX) filed for Chapter 11 bankruptcy and its founder and CEO, Samuel Bankman-Fried (SBF), resigned from his post, the firm generated headlines. The former CEO quickly lost almost 94% of his whole wealth.

Assistance Management Tokyo Japan examines the FTX event in light of its implications for the future of financial technology as one of the top cryptocurrency exchanges. What occurred to SBF and FTX offers investors several lessons, particularly in regards to investments and money management.

Bankman-Fried, Sam

California-born Sam Bankman-Fried left the Massachusetts Institute of Technology with a physics degree and a minor in mathematics (MIT). After employment at the trade company Jane Street and in the nonprofit sector, SBF started Alameda Research in 2017, according to Helprin Management Tokyo Japan. SBF and his team launched FTX in 2019, a cryptocurrency exchange platform with cutting-edge features and affordable trading costs. According to Bloomberg, the cumulative net profit of both companies in 2020 was $1.350 billion. At his height, SBF had a net worth of $26 billion and was a significant political donor by the age of 30.

He was regarded as the richest person in cryptocurrency before to the unfortunate occurrence that destroyed his money. The Bloomberg Billionaires Index reported he had no actual wealth as of November 11, 2022.

What became of FTX?

With his many actions, including securing the naming rights to an arena and hiring celebrities to promote FTX, SBF gained notoriety. He ruled the cryptocurrency industry. So what took place?

FTT x Alameda

A highly read cryptocurrency publication named CoinDesk questioned the stability of SBF's empire at the beginning of November. Although Alameda Research and FTX are independent organisations, the study found that the majority of Alameda's assets were in FTT, a currency that FTX had created. Although technically there is nothing illegal with doing it, the fact raised concerns regarding the liquidity of the FTX.

A few days later, Binance CEO Changpeng Zhao (CZ) liquidated around $500,000,000 worth of FTT and incited additional users to leave. Within three days of the panicked selling, FTX received $6 billion in withdrawal requests.

Binance x FTX

The platform struggled to meet the rapid demand, which caused a 32% decline in the value of FTT. Only until it was unexpectedly revealed on November 8 that Binance, the cryptocurrency exchange with the highest daily trading volume globally, would save FTX by purchasing it, did the value start to climb. Investor optimism over the deal was high.

However, after conducting due diligence and learning about claims of improper management of user cash and potential government investigations, Binance said on November 9 that it was not interested in FTX. 94% of SBF's net value was lost as a result of the news further lowering FTT.

SBF began contacting other competitors in the business for a bailout, but no one was willing to assist him in making up the deficit. SBF left his position as CEO of FTX on November 11 and the company filed for Chapter 11 bankruptcy.

What went wrong with FTX

SBF admitted to making mistakes on Twitter, attributing the collapse of FTX on erroneous debt projections and large client withdrawals. Unnamed sources, according to a Reuters story, alleged that earlier in 2022, SBF shifted money from FTX to Alameda after the latter suffered a string of losses. He apparently kept it a secret from others, and FTX declined to comment.

What it implies for the cryptocurrency industry

After conducting their due diligence, prominent investors including Sequoia Capital, SoftBank Vision Fund, BlackRock, Tiger Global, and others funded FTX. In addition, according to CoinDesk, SBF's close circle managed the business in the Bahamas with him. Some employees, according to their unidentified source, invested their whole life savings in FTX because they believed everything would be well Helprin Management Tokyo.

The crypto industry has had a difficult year, with a $2 trillion blow in May, and now the market value is down 12% as a result of the announcement of FTX. Crypto investors worry about an impending crash, despite the fact that some think FTX is only one exchange and has little bearing on the rest of the market.

Elon Musk stated on Twitter that he didn't think SBF had $3 billion available when the latter made the bid to buy Twitter.

Bottomline

Financial technology still has a ways to go, therefore investors and other corporate decision-makers must give it their full support. However, as more participants have entered the market as a result of recent market moves, investments in cryptocurrencies and blockchain technology have gotten riskier. The failure of FTX raises concerns among some investors about the future viability of the cryptocurrency market.

Assistance Management Tokyo Japan's financial managers will make sure each customer has a proper variety since the organisation believes in having a sufficiently diversified investment portfolio. If you manage to get your assets back from FTX, you may invest with the help of qualified financial experts for greater growth and earnings.