#FTX, a crypto exchange valued at $32 Bn went under🥵
$32Bn is INR 250,000 Cr+, i.e., More than HCL Tech and Wipro's valuation 🤯
What happened❓ Let's decode👇
$32Bn is INR 250,000 Cr+, i.e., More than HCL Tech and Wipro's valuation 🤯
What happened❓ Let's decode👇
A. Background
Alameda Research was founded in 2017 by Sam Bankman Fried
It was a trading firm in crypto space (think, Zerodha)
Later, Sam built an exchange - FTX, in 2019 (think, Bombay Stock Exchange)
Alameda Research was founded in 2017 by Sam Bankman Fried
It was a trading firm in crypto space (think, Zerodha)
Later, Sam built an exchange - FTX, in 2019 (think, Bombay Stock Exchange)
FTX decided to expand its bouquet of services
They starting giving loans to customers
Who bought cryptos on loan and FTX charged interest against that
Later, they decided to bring their own cryptocurrency - FTX Token (#FTT)
They starting giving loans to customers
Who bought cryptos on loan and FTX charged interest against that
Later, they decided to bring their own cryptocurrency - FTX Token (#FTT)
B. How was FTT's value pumped?
FTX promised all FTT holders preferential trading access and promised lower fees and no withdrawal cost
FTX started to buy #FTT coins and the price of FTT, i.e., the crypto currency, went up
FTX promised all FTT holders preferential trading access and promised lower fees and no withdrawal cost
FTX started to buy #FTT coins and the price of FTT, i.e., the crypto currency, went up
FTX started buying FTT coins from the exchange fee
#AlamedaResearch also owned FTT coins at very low price (no one knew)
When FTT's price went up, Alameda's Balance Sheet grew and they took more loan
FTX (also) gave Alameda loans based on FTT's collateral (as it is alleged)
#AlamedaResearch also owned FTT coins at very low price (no one knew)
When FTT's price went up, Alameda's Balance Sheet grew and they took more loan
FTX (also) gave Alameda loans based on FTT's collateral (as it is alleged)
C. Cause of Failure
When people went on FTX to sell their cryptos,
FTX didn't have enough money to support withdrawals
CoinDesk, a crypto media platform shared the leaked balance sheet of Alameda
What was there in the balance sheet was interesting👇
When people went on FTX to sell their cryptos,
FTX didn't have enough money to support withdrawals
CoinDesk, a crypto media platform shared the leaked balance sheet of Alameda
What was there in the balance sheet was interesting👇
Now, Alameda has to pay its lenders $8Bn 🥵
But most of its assets are in FTT 🤯
Whose value has gone down from $25 to $2.6 within 2 days 🔻
But most of its assets are in FTT 🤯
Whose value has gone down from $25 to $2.6 within 2 days 🔻
People panicked and started withdrawing money from FTT coins
And other coins purchased via FTX exchange
FTX can't honour withdrawals now
Indians would related to this quote --> "FTX ka toh Franklin ho gaya"
What's your opinion?
And other coins purchased via FTX exchange
FTX can't honour withdrawals now
Indians would related to this quote --> "FTX ka toh Franklin ho gaya"
What's your opinion?
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