Updated: Nov. 13, 12:52 p.m. EST
Following in the footsteps of Voyager and Three Arrows Capital, FTX is the latest example of crypto’s volatility: In just a week, it went from the industry’s potential savior, leading rescues of failing firms, to needing a bailout itself. Revelations that the powerful-seeming crypto exchange was far flimsier than it let on have led it to the verge of collapse.
Here’s a breakdown of everything that’s happened to FTX this week.
Nov. 2: It begins.
Based on a leaked balance sheet for Alameda Research, FTX CEO Sam Bankman-Fried’s trading firm, CoinDesk reported that much of its reserves were based on FTT, “FTX’s own centrally controlled and printed-out-of-thin-air token,” Swan Bitcoin CEO Cory Klippsten told CoinDesk. FTX uses FTT as a reward currency for trading discounts, and Alameda held far more of the tokens than traded on the market, suggesting its stake would be hard to liquidate at current prices.
Nov. 6: Binance says it plans to pull out of FTT.
Binance CEO Changpeng “CZ” Zhao said his company, the largest crypto exchange, planned to sell its FTT holdings, which dated back to an early investment by Binance in FTX. CZ compared FTT to the imploded luna token, which Binance also previously backed. FTT’s price started to wobble after this announcement.
Nov. 6: CZ and SBF have a tiff.
The warring crypto CEOs engaged in an exchange of barbs on Twitter, with Bankman-Fried ultimately imploring Zhao and others to “Make love (and blockchain), not war.”
Nov. 8: Binance offers a bailout.
FTX stopped paying back customers, its first visible sign of weakness. The love seemingly arrived quickly, with Binance signing a nonbinding letter of intent to buy its smaller rival. CZ said in a tweet that FTX “asked for our help” as it faced a “significant liquidity crunch.” FTT plummeted by another 75% on Tuesday after CZ revealed his takeover plan.
Nov. 9: NVM! Binance backs out.
Love didn’t last. Binance quickly reversed course and backed away from the deal after a “corporate due diligence” review revealed issues in FTX’s financial situation that Binance said were “beyond our control or ability to help.”
Nov. 9: U.S. regulators reportedly begins investigating FTX.
Along with its liquidity crisis, the Securities and Exchange Commission and the Commodity Futures Trading Commission started investigating the company's relationships with sister entities Alameda Research and FTX US, as well as allegations that the company mishandled customer funds.
Nov. 9: FTX’s bad luck spreads to the rest of the crypto industry.
Crypto.com stopped withdrawals of USDC and USDT on the Solana blockchain Wednesday out of an “abundance of caution,” CEO Kris Marszalek wrote on Twitter, citing FTX’s role in trading Solana-based stablecoins and operating a Solana bridge. Solend, one of the larger Solana lending protocols, reported it was having problems liquidating part of a large loan Wednesday morning. It also disabled all borrowing, according to its website.
Nov. 10: Alameda Research falls.
Bankman-Fried announced that Alameda Research would wind down trading on Thursday as a hail-Mary effort to save FTX. “I fucked up, and should have done better,” he said in a Twitter thread announcing the move. “[R]ight now, we're spending the week doing everything we can to raise liquidity. I can’t make any promises about that.” The company was also weighing bankruptcy.
Nov. 10: FTX scrambles for cash.
According to a Reuters report, FTX sought around $9.4 billion in rescue funds from investors, seeking liquidity as many users pulled out their holdings. Bankman-Fried was reportedly in talks to raise cash from rival exchange OKX and stablecoin issuer Tether. He also sought a cash infusion from current FTX investors, including Sequoia Capital. He did manage to strike a deal with Justin Sun, the founder of blockchain network Tron, to allow holders of Tron-related tokens to withdraw their holdings from FTX.
Nov. 10: FTX US warns of potential trading pause.
Despite Bankman-Fried saying in a Twitter thread that FTX US “was not financially impacted by this shitshow” and was “100% liquid,” a banner on the top of FTX US website reads “trading may be halted on FTX US in a few days. Please close down any positions you want to close down. Withdrawals are and will remain open.”
Nov. 11: FTX files for bankruptcy and Bankman-Fried steps down.
FTX filed for Chapter 11 bankruptcy. The company also announced that Bankman-Fried resigned as CEO. FTX, Alameda Research, and roughly 130 affiliated companies started bankruptcy proceedings "to review and monetize assets for the benefit of all global stakeholders,” the company announced on Twitter. The filing includes FTX US, despite Bankman-Fried previously stating that the operation was isolated from the financial chaos of FTX as a whole. John J. Ray III, a lawyer who helped run Enron post-bankruptcy, has been named CEO of the FTX Group. Bankman-Fried will remain “to assist in an orderly transition."
Nov. 12: Customer funds go missing.
According to a report by Reuters, at least $1 billion in funds from FTX customer accounts has gone missing. After Bankman-Fried moved $10 billion of customer funds from FTX to Alameda Research, a large chunk of that sum (between $1 and $2 billion) vanished. Separately, FTX said it's investigating "unauthorized transactions" after blockchain analytics firm Elliptic said $473 million in assets were "moved out of FTX wallets in suspicious circumstances early this morning." In a tweet that morning, FTX US general counsel Ryne Miller said the company "initiated precautionary steps to move all digital assets to cold storage."
Nov. 13: Bahamian authorities get involved.
Police in the Bahamas, where FTX is based, said they are working with the Bahamas Securities Commission on a investigation of the company to determine if "any criminal misconduct occurred." FTX co-founder Sam Bankman-Fried was interviewed by Bahamian police and regulators on Nov. 12, Bloomberg reported.