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What Happened to FTX

FTX introduced a native currency token named FTT. Users can use FTT to pay transaction fees or other expenses. Mr. Bankman-Fried (FTX's founder) used tokens to pay part of the price for Zhao's FTX shares. A leaked document on November 2 stated that Mr. Bankman-Fried owned significant shares in a hedge fund known as Alameda Research. The document suggested that the two businesses shared close financial ties. FTT stands for the fictional currency FTX, which is meant to be a separate business with no connection to Alameda Research.

Binance announced on November 6 that it would sell off its FTT tokens due to recent revelations. Consequently, the price of FTT plummeted and investors quickly sold FTX in anticipation that it would be another failed company. By the time FTX processed $6 billion worth of withdrawal requests in three days, it was experiencing a liquidity crunch. This meant that it had no money to fulfill withdrawal requests and its systems were unable to process any new requests.

How FTX Ruined Cryptocurrency?

Many people in the cryptocurrency industry struggle to convince others— including investors, financial regulators, and regular customers — that their business is trustworthy. This was exemplified when FTX fell apart after it appeared more stable than other companies. 

Prices for the Token of Value have significantly decreased since Tuesday; the price of FTT has decreased by over 80%. Additionally, Ether and Bitcoin prices have greatly fluctuated since Tuesday. Some of the most valuable tokens in the world dropped more than 20% in one day alone.

This post was written in 13 NOVEMBER 2022

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