As the days pass, the weirder the FTX case becomes. In turmoil since risky financial arrangements were revealed, the company went from the world’s second largest cryptocurrency exchange platform to purgatory in just a few days. Founded in 2019, it declared bankruptcy, thus spreading a wave of panic in the cryptosphere.
Untraceable for the moment, Sam Bankman-Fried, founder and ex-boss of FTX, who refuses to give his current location for security reasons, is in the eye of the storm. And for good reason, the latter transferred 10 billion dollars of FTX client funds to a sister company of the latter, Alameda Research, part of which would have disappeared. According to FTX’s legal teams, the company’s CEO, who has since resigned, implanted a backdoor in the accounting system, allowing him to discreetly execute commands to modify the company’s financial records.
A failed rescue operation
The situation is critical for many platform customers, as Reuters reports that between $1 billion and $2 billion in customer funds have gone missing. Stuck in a scandal with catastrophic consequences for the crypto ecosystem, now facing a crisis of confidence, Sam Bankman-Fried is still trying a last ditch to save face, according to the wall street journal.
Indeed, the American economic daily reveals that the ousted boss of FTX is trying to raise funds to return the money to users of the platform, according to sources familiar with the matter. With the support of a few employees still present in the company, Sam Bankman-Fried multiplied the calls last weekend to request new commitments from investors, so as to make up for a shortfall of up to 8 billion dollars and thus reimburse FTX customers. However, these efforts have yet to bear fruit.
Therefore, the demise of FTX seems increasingly inescapable. While Binance had considered buying the platform for a while, the Changpeng Zao (CZ) company had finally thrown in the towel after carrying out an audit revealing catastrophic management of the finances of the rising star of the crypto ecosystem. Before collapsing, FTX had begun talks this summer to raise $1 billion, with a view to acquiring companies in a period of severe market downturn. Eventually, it will be nothing. It will take a miracle for Sam Bankman-Fried to extricate himself from this impasse, while the American authorities want to question him.