Here's a weekly overview of the previous week's cryptocurrency market activity.
As the market was starting to believe that the "Crypto Winter" was over, FTX suddenly collapsed this week, sending values spiraling down across the board.
According to CoinGecko data, the value of both Bitcoin (BTC) and Ethereum (ETH) dropped by around 20% over the previous seven days as a result of a simultaneous crash.
Bitcoin (BTC), the most popular cryptocurrency in the world, is currently trading at $16,872, a level it hasn't reached since November 2020, when it started its pandemic-driven bull run.
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is currently trading at roughly $1,274.
Owners of Solana (SOL), who discovered their pot had shrunk by 47% in the last seven days, experienced the biggest loss among the top fifty cryptocurrencies. SOL is being exchanged for $16.26.
One of Solana's first backers, Sam Bankman-Fried, CEO of FTX, also controlled a significant amount of SOL through his other cryptocurrency business, Alameda Research. The infamous hedge fund's second-largest coin holding was SOL.
FTX total meltdown
At that moment, he appeared to have the money on paper.
Bankman-Fried peaked in riches in March, when his net worth was a staggering $26 billion. Forbes dubbed him "The World's Richest 29-Year-Old" and "the richest self-made newcomer in Forbes 400 history" in October of last year, and Fortune questioned whether he was "the next Warren Buffett" on the cover of its magazine.
This past week, the image broke. FTT is FTX's native token. It all began when Binance CEO Changpeng Zhao announced he will move to sell off all of his exchange's FTT holdings, citing "new disclosures" concerning FTX reportedly pushing "against other industry participants behind their backs."
Zhao's tweet sparked a bank run as FTX users frantically withdrew money from the exchange. In just 72 hours, a stunning $6 billion left FTX. To put it in context, on a typical day, the exchange processed "tens of millions" in withdrawals. Withdrawals were "essentially paused" as a result of the exchange's liquidity issues, following a pattern that is all too common. A source who spoke to Reuters said that the decision to freeze was taken at the highest level.
When Binance agreed a non-binding agreement to bail out FTX for an undisclosed sum on Tuesday, things took an unusual turn. Zhao described the situation as "highly dynamic" and made it clear that his exchange "had the discretion to pull out of the contract at any time," which it did the following day. Zhao claimed that helping FTX was "beyond our capacity."
It turns out that the essential due diligence prevented the potential rekindling of Zhao and Bankman-crypto Fried's bromance. Binance revoked its decision, saying in a tweet that “the issues are beyond our control or ability to help.” citing the "recent press reports surrounding mishandled customer cash and purported US government investigations."
On Wednesday, The world's richest person, with a net worth of more than $200 billion, sold nearly $4 billion in Tesla stock after initially declaring he was done doing so.
The Securities Commission of the Bahamas, where FTX is headquartered, issued an order to freeze the company's assets on Thursday, kicking off the drama's concluding act. The Bahamian regulator revoked the exchange's operating license and requested that a provisional liquidator be assigned from the Supreme Court.
With the announcement that FTX had filed for Chapter 11 bankruptcy, the crisis came to an end on Friday. Alameda Research will also file for bankruptcy, along with the exchange's American subsidiary FTX.US and over 130 related firms.
As of right now, CEO Bankman-Fried has resigned, and John J. Ray III, a seasoned bankruptcy attorney, will take over in his place.
Former FTX CEO tweeted on Friday: