The past week has been the most nerve wracking for the crypto industry. FTX went from being a world renowned crypto exchange platform to declaring bankruptcy and its token FTT leading to a liquidity crisis.
It’s believed that FTX’s rival Binance led to its collapse. Known by the monikers SBF and CZ, Sam Bankman-Fried and Changpeng Zhao built the world’s best crypto exchange platforms, FTX and Binance respectively.
Here is a timeline of how this series of unfortunate events happened.
Wednesday 2 November
CZ was in Lisbon as a headline speaker at the annual Web Summit, as usual, defending the future of digital assets. It was during this summit that the fuse was lit on FTX’s collapse. As Zhao spoke, CoinDesk published a damning report about Alameda Research, a crypto hedge fund owned by Sam Bankman-Fried.
Alameda Research held billions of dollars of FTT and using it as collateral in loans. This meant that if FTT’s value dipped, both firms would be hurt since they shared ownership.
Friday 4 November
A crypto-researcher using the pseudonym Dirty Bubble Media published more claims on Substack, the newsletter platform, about FTX and Alameda Research. In the newsletter, the researcher wrote: “It’s almost as if SBF [Sam Bankman-Fried] found a way to hack the financial system, printing billions of dollars out of thin air against which he was able to borrow massive sums from unknown counterparties.”
Sunday 6 November
After CoinDesk’s report about Alameda Research Balance Sheet, Binance announced it would sell its FTT. Alameda’s CEO, Caroline Ellison rubbished the report claiming it was not comprehensive.
Monday 7 November
Tension about FTX simmered down as the week kicks off. SBF took to twitter to say, “FTX is fine. Assets are fine.”
However, at 10:41 p.m. FTT token dropped sharply from $22 to below $18.
Tuesday 8 November
CZ announced that he wanted to buy FTX and rescue it. He also signed a non-binding (letter of intent) intending to fully acquire FTX. SBF also took to Twitter to confirm the deal but mentioned that the deal would be fruitful after a DD (due diligence).
Wednesday 9 November
The deal was off. Binance walked away from acquiring FTX, a major turning point in the company’s journey towards collapse. Initially, the crypto markets responded with volatility when the news about the purchase were made. Bitcoin dipped below $17000 and several other tokens associated with FTX dipped. At the same time, people were taking their money off crypto exchanges.
After the news that the deal would not go on, FTX’s website crashed and showed error messages to users who wanted to log in. FTX was headed for bankruptcy Binance backed out. SBF told investors that the company would need to file for bankruptcy if it did not find more money. He also added that FTX was facing an $8 billion shortfall.
The US Justice Department joins Securities and Exchange Commission (SEC) in probing the sudden implosion of FTX.
Thursday 10 November
The day started off with SBF apologizing on Twitter. “I’m sorry. That’s the biggest thing,” he said in a tweet. “I f*cked up, and should have done better.”
FTX’s future was now in serious doubt.
Friday 11 November
FTX filed for chapter 11 bankruptcy in Delaware. In addition, Alameda Research and 130 other companies were included in the filing. SBF resigned from his position as CEO.
At around 10.54am, SBF tweeted again and apologized to people claiming he was shocked by how the events played out. SBF’s fortune was wiped out in days, a whole $16 billion. He is no longer ranked in Bloomberg’s Billionaire index.
A tremendous fall from grace.