FTX Trading Ltd. is a Bahamas-based cryptocurrency derivatives exchange. The company was cofounded in 2019 by Sam Bankman-Fried and Gary Wang. FTX allows users to trade a variety of cryptocurrencies, NFTs and other digital assets on the platform, as well as its own coin, FTT. At its peak, the company was the third-largest cryptocurrency exchange by volume in the world and was valued at $32 billion.
On November 11, 2022, FTX filed for chapter 11 bankruptcy after a run on deposits left the exchange with an $8 billion shortfall, forcing Bankman-Fried to step down from his role as CEO.
FTX began in 2019 as a cryptocurrency derivatives exchange, which allowed users to bet on the future value of a cryptocurrency. Originally based in Hong Kong, FTX rapidly expanded and began offering users the ability to trade many popular cryptocurrencies and NFTs. In July 2021, the company closed a $900 million Series B funding round and received a valuation of $18 billion. By October of that same year, FTX's value had grown to $25 billion. The company's growth was spearheaded by Bankman-Fried, who had become a well-known face in Washington, D.C. for his work advocating for crypto-friendly regulation in the US. Additionally, FTX signed a number of lucrative sponsorship deals in 2022, including the naming rights to the Miami Heat's home arena. FTX's US arm also received a valuation of nearly $8 billion that same year.
Trouble began for FTX on November 2, 2022, after crypto news website CoinDesk published a report that Alameda Research, a cryptocurrency trading firm also founded and managed by Bankman-Fried, held an unusually high amount of its $14.6 billion in assets in FTT, the token issued by FTX that grants holders a discount on trading fees in its marketplace. Days later, rival cryptocurrency exchange Binance announced that it would sell all of its FTT tokens as a result of the report. This caused the price of FTT to plummet, leading traders to rush to withdraw their funds from FTX. FTX had difficulty processing the requests, which amounted to nearly $8 billion, and froze withdrawals from the exchange.
Days later, on November 8, Binance announced it had reached an agreement to bail out FTX by purchasing the company. The next day, however, Binance's leader, Changpeng Zhao, said it would no longer be buying FTX, citing regulatory investigations and reports of mishandled funds. On November 11, Bankman-Fried stepped down as CEO of FTX and announced that the company was filing for Chapter 11 Bankruptcy. The company announced on Twitter that John J. Ray III, a corporate turnaround specialist, would be taking over as CEO. FTX officially started bankruptcy proceedings on November 22, 2022, in a federal court in Delaware.
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