Crypto exchange is bankrupt – assets frozen

The horror week for cryptocurrency fans ends with another bad news: The FTX Group, which operates one of the largest trading platforms for digital currencies such as Bitcoin, has gone bankrupt.

11/11/2022, 4:16 p.m11/11/2022, 6:14 p.m

Troubled crypto exchange FTX is officially insolvent. Technology entrepreneur Sam Bankman-Fried’s group filed for bankruptcy protection in the United States on Friday, according to its own filings. Bankman-Fried also announced his resignation as CEO. The previous evening, the Bahamian securities regulator announced that it had frozen certain assets of FTX and asked an insolvency practitioner to handle the transaction.

Bitcoin benefited from a general upturn in the financial market on Thursday, last trading just below $17,500.Image: keystone

The imbalance of a major trading platform for digital currencies like Bitcoin has kept the crypto market on edge for several days. Many customers are worried about their money. The Bankman-Fried crypto empire, hailed a few months ago as a prodigy and a beacon of hope in the industry, collapsed in just a week. At first it appeared that only Bahamian-based international business was in distress. Now it’s clear: the whole group is in decline.

“I screwed up,” Bankman-Fried said Thursday. But he still assured customers in America that their deposits were safe. Just one day later, FTX filed for bankruptcy. According to the group, the U.S. Chapter 11 bankruptcy proceedings concern, among others, U.S. crypto exchange FTX US, which Bankman-Fried just described as “100 percent liquid,” and 130 other companies that together make up the FTX Group.

International crypto platform Bankman-Fried ran into payment difficulties on Sunday after doubts about capital reserves led to a flight of customers and billions in withdrawals. According to the Bahamian securities regulator, the company is suspected of misappropriating customer funds, among other things. On Wednesday, it initially looked like most of the ailing group would be taken over by competitor Binance. But this plan failed the next day.

FTX’s decline is breathtaking even for the crypto industry, which is characterized by excessive speculation and extreme price fluctuations. The group, which was at times valued by investors at $32 billion, completely collapsed within days. Bankman-Fried, who as a 30-year-old star entrepreneur graced the front pages of well-known American business magazines such as “Fortune” a few months ago, is standing in the ruins of his corporate empire and, according to US media, is facing an investigation by the supervisory authorities.

The FTX debacle has hit the already heavily battered crypto market hard in the past few days. The bankruptcy was not really a surprise, so Bitcoin was initially relatively stable at around $17,000 on Friday after heavy losses throughout the week. On Wednesday, concerns about FTX pushed the price to a two-year low below $16,000. For reference: In November 2021, the largest, oldest and most well-known cryptocurrency on the market reached an all-time high of just over $68,000. (awp/sda/dpa)

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