Why Crypto is Crashing? FTX Incident

Why Crypto is Crashing?: Yes, it’s true—crypto is once again collapsing. The crypto market was already being hurt by the inflation and a more plague falls onto it. The FTX incident causes the fall of price of various digital currencies.

Talking about the same, instead of crashing after recovering, it crashes from close to the location of the prior crash. For the unversed, bitcoin has fallen to its lowest price in almost two years as a result of the aftermath from the FTX incident.

So, let’s understand why it is causing to fall of crypto currencies’ price which already was in crypto winter. The apparent collapse of one of the biggest cryptocurrency exchanges in the world, FTX, is directly responsible for the present slump in crypto’s prices. Let’s know the ins and outs of the most prestigious crypto exchange and to being on the verge of collapse.

FTX: Prestigious Cryptocurrency Exchange

The business was merely founded in 2019, with a short of span of time, it has achieved significant milestones. For the uninitiated, Binance, a significant cryptocurrency exchange, was one of their first investors.

With the great business intelligence, SBF grabbed the opportunities and create this business. His business benefitted from the epidemic crypto bull run, and becoming one of the most growing companies in the world. Talking about the same, its revenue from nothing to $1.2 billion achieved it in just two years. Not a valuation of $1.2 billion, but revenue of $1.2 billion.

SAM Bankman-Fried, with its successful prestigious crypto exchange becomes the richest person in the world under the age of 30 years. Honestly speaking, SBF (Sam Bankman-Fried) acquires a personal net worth of $26.5 billion.

Surprisingly, FTX was valued at $32 billion during their most recent investment round in January 2022, with $400 million coming from Paradigm. Along the way they acquired 15 other companies in the crypto realm. Additionally, they signed individual contracts with professionals like Shohei Ohtani, Tom Brady, and Steph Curry. They also splashed cash on several sponsorships.

Why Crypto is Crashing? | FTX Incident

With the expansion of FTX, Binance transformed from a generous supporter to a significant rival. They decided to split ways for almost $2 billion with Binance still retaining a sizable stack of FTX.

The twist was that Binance agreed to absorb a sizable chunk of the buyout funds in the form of FTT, FTX’s own token that is used to pay trading commissions on their platform.

By itself, this hasn’t led to any problems. SBF is considered as a very secure set of hands in a field riddled with charlatans and con artists, whereas FTX is typically thought of as one of the strongest names in cryptocurrencies.

That is, until Changpeng Zhao, co-founder and CEO of Binance, also known as “CZ,” declared on Twitter that SBF will be selling all of their remaining $529 million worth of FTT as a result of making false statements about Binance to American regulators.

As would be expected, investors fled the market in anticipation of a large dump, which caused the price of FTT to plummet. It dropped by over 30% almost immediately, causing a run on the site that resulted in lengthy delays and withdrawal limits for investors.

Importantly, the offer wasn’t legally binding, so before FTX completely committed to the sale, Binance would have to look through their books to determine what they had promised to acquire.

SBF Twitter: Hey all: I have a few announcements to make.

Things have come full circle, and http://FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for http://FTX.com (pending DD etc.).

It appeared that everything was back to normal and that a new industry crisis had been avoided.

Binance said today that they were terminating their agreement with rescue FTX. They cited ongoing probes by American officials and worries about the company’s business operations as justifications for their change of heart.

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