Since of the failure of FTX, the cryptocurrency equivalent of Robin Hood is unable to continue his charitable work because his riches has been completely wiped out
It was clear to everyone that Sam Bankman-Fried was in a hopeless situation. After the decision was made by one of his most significant competitors, Binance, to withdraw from the process of purchasing FTX, the CEO of FTX required a major miracle to rescue his cryptocurrency exchange business. Finally, it was not possible for this to happen, but FTX has filed for bankruptcy, and the company's founder has resigned.
This implies that both FTX and Alameda Research, along with the rest of the subsidiaries, will seek legal protection under what is known as Chapter 11 bankruptcy in the United States. This method is designed to bring about the greatest possible amount of recoveries. The 23-page petition for bankruptcy states that FTX has more than 100,000 creditors, assets valued between $10 billion and $50 billion, and liabilities valued between $10 billion and $50 billion.
John J. Ray III, a specialist in corporate restructuring who already has vast experience supervising the bankruptcy of energy giant Enron, will succeed Bankman-Fried and will assist with the transition. Bankman-Fried will be succeeded by John J. Ray III, who will also help with the transition. The newly appointed director has taken the necessary steps to guarantee that FTX "has important assets that can only be handled efficiently in an organized and unified way." This procedure is going to be carried out with "effort, diligence, rigor, and openness," according to the Chief Executive Officer, who has given his word on the matter.
Desperate, they sought to acquire assistance from the other competitors
According to a story that was published exclusively by Reuters, Bankman-Fried was attempting to raise $9.4 billion. In light of this fact, he was engaging in conversation with the other party. According to the news organization, which cited a person with direct knowledge of the situation, Bankman-Fried requested approximately one billion dollars from Justin Sun, the founder of the Tron cryptocurrency; one billion dollars from the cryptocurrency exchange OKX; another one billion dollars from Tether; and two billion dollars from a consortium of investment funds. The remainder of the money ought to have been contributed to him by the other investors.
Unfortunately for Bankman-Fried, who is just 30 years old, he has not been able to collect all of the money he need in order to rescue FTX from going bankrupt despite the fact that some of the negotiations have gone quite well. In point of fact, Bankman-Fried resisted filing for bankruptcy and appointing restructuring counsel until it really had no other option.
The most developed possibility was always Justin Sun, who together with his team was seeking for "a solution using FTX to start a journey." On the other hand, specifics of the manner in which the agreement may be expanded were never discussed in any length. Bankman-Fried was optimistic that the negotiations with Sun would bear fruit because they had reached a point of understanding. Tron and FTX had come to an agreement that will allow holders of TRX, BTT, JST, SUN, and HT to "trade FTX assets 1:1 to external wallets." Bankman-Fried believed that this would increase the likelihood that the negotiations with Sun would be successful.
He has barely six percent of his riches remaining in his possession
The creator of FTX has been unsuccessful in running his firm and has lost a significant amount of money. He has also likely alienated a great number of other individuals. The cryptocurrency exchange that he established in 2019 has failed and been declared insolvent.
Within the realm of cryptocurrency, Bankman-Fried was venerated as a figure of heroic importance. He was both a wealthy and powerful character in society. He was one of the most influential individuals. And in a very short period of time, he has lost 94% of his wealth, which, according to Bloomberg, was more than 15,000 million euros at the beginning of this week.
The lack of faith in the platform, which was far more closely tied to Alameda Research, a cryptocurrency hedge fund also formed by Bankman-Fried, than was alleged to be the primary cause of the failure of FTX, is the primary reason for the collapse of FTX. Both may be said to have operated separately, at least in theory. On the other hand, things weren't quite like that.
In a recent post that was published on CoinDesk, it was reported that a significant amount of the assets held by this fund were FTT, which is a token produced by FTX almost entirely from scratch. One of the individuals who began to have suspicions as a direct consequence of this information was Changpeng Zhao, who serves as CEO of Binance. Consequently, he made the decision to sell the firm that was worth 580 million dollars in FTT. Due to the fact that he was such a prominent figure in the world of bitcoin, a large number of people decided to follow in his footsteps. As a consequence of this, a feeling of unpredictability set hold, and a significant number of people started withdrawing their FTT funds.
Reuters reports that $6 billion was removed from FTX around 72 hours before the company's fall from grace. When confronted with this flight, Bankman-Fried went absolutely insane asking for financial backup, which is something that would be quite suspect if everything at FTX was in order.
This young millionaire should not have been as anxious as he was since the platform for trading cryptocurrencies ought to be financially stable enough to be able to handle withdrawals if everything had gone according to plan. However, analyst Lucas Nuzzi has brought to our attention the fact that FTX sent monies to Alameda in the month of September. In other words, in order to prevent Alameda from going out of business, Bankman-Fried took cash from FTX, which resulted in the latter being left in an entirely vulnerable state. The crypto king, who has acknowledged to have overestimated FTX liquidity and user margin before the crisis, made a significant error in his analysis, which led to a negative outcome. As a result, FTX was forced to put a halt to client withdrawals due to a lack of liquidity after watching all they had worked for go down the toilet.
Bankman-Fried breathed a sigh of relief when Zhao and Binance arrived on the scene to rescue FTX. The failure of Bankman-Fried to properly run their business, on the other hand, has stopped the transaction from going through. "As a consequence of the current reports concerning the mismanagement of client assets and purported investigations by US authorities," they said from Binance, "we have decided not to move through with the proposed acquisition of FTX.com." FTX.com is a foreign exchange trading platform.
Following this disaster, FTX, which has now resumed processing withdrawals, is in desperate need of financial support in order to continue operating. The three conceivable outcomes for Bankman-Fried are quite clear: either the competition loans money to someone who has abused it, or the competition decides to acquire it like Binance has already attempted, and Sun would be happy to assist in any of these two ways, or FTX declares bankruptcy. In the event that this takes place, those individuals who have not yet withdrew their money run the risk of having it stolen from them.
This is known as the Bankman–Fried mantra
According to Reuters, since since FTX started to come apart and its CEO understood what was coming, he has only uttered three words: "I messed up." According to the news agency, Bankman-Fried has sent an apology to each and every one of its staff members and asked for their forgiveness.
On Twitter, where he has been subjected to a substantial amount of backlash, he has also issued an apology for the manner in which he has been proceeding. Furthermore, he has explained that he should have "done better" in a lengthy thread in which he chronicles the events of the FTX crash and what the next steps are going to be on the cryptocurrency trading platform. In this thread, he also explains what he thinks the next steps are going to be on the cryptocurrency trading platform.
You will be required to give up all that you still own, regardless of how little or how much there is
As a result of your poor financial management, you now have a far less fortune than you had before. Despite this, he is still worth a billion dollars, and he will have to give up the rest of his fortune. When he signed the Giving Pledge, a public pledge that is made by some of the richest people and families in the world, he placed it in paper for everyone to see. This contribution may be provided either during someone's lifetime or after they have passed away.
Effective altruism is a crucial philosophy that encourages maximizing the amount of good created for others via giving to charity. The CEO of FTX made the decision to make this donation because he considers himself an effective altruist, which is a key philosophy.
Bill Gates, together with his ex-wife Melinda Gates, and Warren Buffett, an investor, came up with the idea for The Giving Pledge. This commitment's end goal is to increase the amount of money received through philanthropic contributions made by the richest individuals. To this day, 230 people from 28 different nations have signed the pledge. These people include Elon Musk, the current owner of Twitter and the inventor of Tesla and SpaceX, as well as Mark Zuckerberg, who was the person who first started Meta.
