PRISON ARCHITECT CRASHING SERIES

Since the crisis at FTX began, bitcoin has plummeted from $20k a coin to $16.5k, its lowest value since 2020. Could there be a spillover to the rest of crypto? The Wall Street Journal reported that FTX had loaned $10bn of customer funds to Alameda to gamble with, a substantial proportion of the exchange’s $16bn in assets. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.īankman-Fried’s apology only went so far, however, and users still had questions, particularly given other claims that he was making at the same time. For more information see our Privacy Policy. Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties.

PRISON ARCHITECT CRASHING SERIES

“I fucked up twice,” he wrote, kicking off a series of tweets in which he apologised for poor communications and said he had mistakenly assumed the exchange could not face a liquidity crunch, but argued that it was not actually insolvent. The day after the sale fell through, “SBF” resurfaced, and apologised for his failures. But a message to investors from Sequoia Capital, a VC firm that ploughed $150m into FTX, said the company was facing not just a liquidity crunch but solvency problems – meaning it owed more money than it actually had. Just a day before the company agreed to sell to Binance, Bankman-Fried tweeted that FTX was “fine” and that it did not trade with customer assets at all. There are also deeper questions for the exchange. Bloomberg reported on Thursday that Bankman-Fried had said the firm needed $4bn to stay solvent, with a funding gap of $8bn. That is never easy when so many customers are rushing for the door. The company either needs to find billions of dollars to meet customers’ withdrawal demands, or to stem the exodus by finding a way of reassuring them their money is safe. “The issues are beyond our control or ability to help,” Binance said, citing discoveries in the due diligence process and the launch of regulatory investigations in the US. Zhao then stepped in to rescue FTX, agreeing on Tuesday to buy the company but then announcing on Wednesday that he was stepping away from the deal. Daily withdrawals normally ran to tens of millions of dollars, Bankman-Fried told his employees. In a message to staff this week, cited by Reuters, Bankman-Fried said the firm suffered a “giant withdrawal surge” as users rushed to take out $6bn (£5.1bn) in crypto tokens from FTX over a three-day period. The value of FTT collapsed, and FTX customers started withdrawing funds in a bank-run-style exodus. The slow-burn crisis was kicked into high gear on Sunday when Binance’s chief executive, Changpeng Zhao, tweeted that his company was selling its FTT holdings, worth about $500m, because of “recent revelations that have come to light”. But FTT itself had no value beyond FTX’s longstanding promise to buy any tokens at $22, prompting fears that the whole institution was a castle built on sand. If this were the case, then a fall in FTT’s value could damage both businesses, given their shared ownership. It claimed that the balance sheet of Alameda, a crypto hedge fund owned by FTX’s founder, Sam Bankman-Fried, held billions of dollars worth of FTX’s own cryptocurrency, FTT, and had been using it as collateral in further loans. On Wednesday last week, an article appeared in CoinDesk, a crypto industry news service, that triggered a crisis. Each also operates an arms-length US-regulated outlet, which closely follows what little regulation there is from the US government, but the bulk of the money that flows through their books is in effect unconstrained by regulatory requirements. FTX is big and important because, along with its rival, Binance, it processes the majority of cryptocurrency trades around the world.īoth FTX and Binance are “international” exchanges, the cryptocurrency equivalent of an offshore casino. Cryptocurrencies are all based on the same basic structure as their star asset, bitcoin: a publicly available “blockchain” that records ownership without having any central authority in control. It is a cryptocurrency exchange, helping people buy and sell crypto assets. Officially headquartered in the Bahamas, FTX is managed from the US, with its biggest offices in Chicago and Miami.

Prison architect crashing