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FTX CEO Sam Bankman-Fried (SBF) resigns from his position but sticks around to oversee an "orderly transition." Meanwhile, the FTX Group, which includes 130 companies, file for Chapter 11 bankruptcy.
It's been a tumultuous week for the crypto exchange, as first, it looked like Changpeng (CZ) Zhao's Binance was ready to bail them out. Then pulled out of the deal almost as quickly as they had come in.
According to The Wall Street Journal, SBF's company Alameda Research owes FTX $10 billion after taking loans funded by FTX customers' deposits. The report brought a curt response from economist Frances Coppola who stated, "It shouldn't be doing anything with those assets. They should literally be sitting there so people can use them."
As of today, FTX CEO Sam Bankman-Fried has resigned from his position. However, he will “remain to assist in an orderly transition.” FTX also sent out a press release on Twitter stating that the FTX group, along with 130 other companies, will begin the process to file for Chapter 11 bankruptcy.
On November 10th, SBF announced, "They aren't doing any of the weird things that I see on Twitter and nothing large at all. And one way or another, soon they won't be trading on FTX anymore." He went on to tweet, "I'm sorry. That's the biggest thing. I fucked up, and should have done better."
A clearly embattled SBF continued, "Every penny of that, and of the existing collateral, will go straight to the users, unless or until we've done right by them. After that, investors, old and new, and employees who have fought for what's right for their career, and who weren't responsible for any of the fuck ups."
Today he went on to add, "Hopefully things can find a way to recover. Hopefully this can bring some amount of transparency, trust, and governance to them. Ultimately hopefully it can be better for customers."
On Thursday, before SBF had filed for bankruptcy, The Securities Commission of The Bahamas issued an order freezing the assets of the embattled crypto exchange. In addition to freezing the company assets, the agency suspended FTX's registration and requested that the Supreme Court of the Bahamas appoints a provisional liquidator.
The Securities Commission of the Bahamas made the press release on Twitter.
This financial chaos caused investors to withdraw Bitcoin from Centralized Exchange (CEX) wallets in serious numbers. Community manager at on-chain analytics firm CryptoQuant, JA Maartun, said, ”More than 80,000 BTC left exchanges wallets in the last 24 hours. Investors are withdrawing their Bitcoin to store them in places other than an exchange." Drawing on the adage, "not your keys, not your coins," he went on to say, "How are you holding your coins? Are they stored on an exchange, in a hardware wallet, or another option? It might be the right time to re-evaluate it."
(Suggested read: Understanding Crypto Wallets | A Beginner's Guide)
Nine prominent exchanges announced they would publish proof-of-their-reserve holdings within the next month. The move comes in the wake of the FTX calamity as crypto investors fear insolvency. The nine exchanges – Binance, Bitget, Bybit, Deribit, Huobi, Gate.io, KuCoin, OKX, and Poloniex, have all issued statements that, in the name of increased transparency, they will publish their Merkle tree reserve certificate.
Merkle tree is a data structure used in computer science applications. They are also known as "binary hash trees."
Following the collapse of FTX, cryptocurrencies and equities posted better-than-expected gains on Thursday. Both Bitcoin and ETH rallied 12% and 21%, respectively. Bitcoin reached $17,434 and ETH $1,298 at the time of writing.
Analysts at Satoshi Labs published a statement that said, "This week's events also underline the power of bitcoin as a genuinely decentralized cryptocurrency offering financial self-sovereignty to the individual, in stark contrast to supposedly reputable tokens that can be wiped out overnight."
(Related read: What Is Inflation and How Does It Affect Crypto)
Coinbase crypto exchange announces 60 staff redundancies in the wake of the tumultuous week in crypto. While bad news for those affected, it’s not on the same scale as the 11,000 staff layoffs announced by Meta. The move by Coinbase comes just five months after they laid off 18% of their workforce, citing the forthcoming “extended crypto winter.” (Read more)
In the latest elections in the US, Republican Tom Emmer and Democrat Bill Foster, both seen as crypto-friendly, are heading to Washington. Democrat Caucus members Josh Giottheimer and Ritchie Torres were also successful, with results that look positive for the crypto world. However, how these results will affect the possibility of regulation remains to be seen.
General counsel at Bitcoin.com, Joseph Collement, mused, “Some believe that Republicans are more friendly to our industry, while others believe that there is possibly an emerging bipartisan consensus over formulating friendly and pro-growth regulation.” (Read more)
In a successful 556 to 18 vote on Thursday, European Union lawmakers supported stricter cybersecurity rules on crypto providers and other financial institutions. Mairead McGuinness, European Commissioner, commented in the debate that, The Digital Operational Resilience Act (Dora) is “a cornerstone of our work on digital finance in the European Union, making sure that we support innovation and do it in a safe way. Protecting the financial system from cyber attacks and cyber fraud is vital.” (Read more)
In a move seen by staff as unnecessarily antagonistic, Elon Musk has ordered Twitter employees, working from home for months, to return to the office for at least 40 hours per week. The workers who believe they are more productive in a home-work environment have expressed disappointment. Many experts believe that Musk’s stance is flawed. Natacha Postel-Vinay of The London School of Economics commented, “Most of the evidence shows that productivity has increased while people stayed at home.” (Read more)
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The much talked about Polygon MATIC cryptocurrency platform is directed and discussed to provide a thorough guide to this relatively new kid on the block
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