Sam Bankman-Fried, founder of FTX, a platform for trading and buying cryptocurrencies. driven by its fraudulent FTX actions into an unprecedented bankruptcy, resulting in the loss of more than $10 billion to one million customers.
This dramatic fall comes 10 years after Bitcoin’s inception, when cryptocurrencies seemed to gradually find their place in the world of finance. How can losses of this magnitude arise from the actions of a few adolescent adults incarcerated in a attic in Panama, when the crypto world dreamed of being decentralized and protected from the excesses that caused the 2008 crisis? With the market trending down since early 2022, with Bitcoin losing 74% of its value in just 12 months, the FTX scandal is unlikely to help cryptocurrency players gain the credibility they crave.
FTX, history of the greatest cataclysm in the history of cryptocurrencies
Gregory Raymond Explain “Sam Bankman-Fried is kind of the golden boy of cryptocurrencies, he was the one that everyone wanted to lend their money to and everyone wanted their money too. FTX was one of the most successful startups in the industry, even though he was very young. FTX is a cryptocurrency exchange platform, on which we buy and sell cryptocurrencies, it was created in 2019, it was very successful, it was one of the best platforms in the market, it gained many users. The problem is that there was a sister company, Alameda Research, which took a little too risky bets on cryptocurrency trading and lost everything to the market reversal. Alameda went to withdraw funds from FTX customers, without their consent, which is absolutely forbidden, and it was realized that FTX had lost a lot of funds and the exchange was no longer able to return the money to its customersFurthermore, the difficulties of Alameda Research are linked to the more general difficulties that the world of cryptocurrencies has been going through since the beginning of 2022 due to the war in Ukraine and the end of the overabundant liquidity that had exploded crypto-assets. Assen Slim Insert “the disappearance of liquidity with the end of quantitative easing policies and the increase in interest rates marks the end of a long period of easy liquidity. Despite the slight rally in the cryptocurrency market today, it could be held back by these monetary developments“.
Justice and regulators come into play: is it the end of cryptocurrency?
American justice seems to want to make the trial of Sam Bankman-Fried, which should be held in October, a bogeyman for a sector that plays with the limits of the regulators, Assen Slim Explain “Joe Biden has just passed an executive order to regulate the cryptocurrency sphere. Regulating the industry that revolves around cryptocurrencies with trading platforms, incentivizing the famous digital currencies of central banks, is a kind of multi-directional decree that will automatically cause a tightening of regulations in the United States and also in Europe and elsewhere“, Gregory Raymond Insert “the regulations will be stricter, there is an amendment that will pass very soon in the National Assembly to bring forward the timetable aimed at forcing French players to obtain the approval of the MFA, it is a political response to the FTS scandal. In the United States, the regulation of cryptocurrencies is not yet as mature as in Europe, which is the first economic zone to have decided on a global regulation, but the United States is preparing it, there will certainly be some reactions to what has happened“.
- Assen Thin: Understanding the economy: a matter of citizens (Blue Rider editions, 2022)
- Sam Bankman-Fried explains himself via video conference for the [New-York Times](https://www.youtube.com/watch?v=I Gdw WwW &=4s), November 30, 2022
Testimony from Jake Thackervictim of FTX crash, on NBC News (January 4, 2023)
- Excerpt from the Netflix documentary series “Madoff: The Monster of Finance” (ep. 4/4)