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On 11th November 2022, the second biggest cryptocurrency exchange FTX declared Chapter 11 Bankruptcy along with 100+ affiliated entities. This event has caused a massive blow to the already declining world of crypto.
Since the declaration of FTX’s bankruptcy, some questions have been raised in the crypto world, and beyond such as,
- How can a $32 billion company collapse in a matter of hours?
- What happens to their 1 million+ clients and investors?
- What effect can it have on the world of cryptocurrency?
- And why are these cryptocurrency exchanges collapsing one after another?
In this article, we’ll talk about FTX, its in-house exchange token, FTT, the meteoric rise of FTX, and its unexpected downfall. We’ll also discuss the problems with cryptocurrency exchanges, and what we can learn from this event.
What is FTX Exchange?
FTX Trading Ltd. is a Bahamas-based cryptocurrency exchange and trading firm. FTX was founded by Sam Bankman Fried and Gary Wang back in 2019 and was the third-largest crypto exchange by volume with over one million users.
FTX is an abbreviation for "Futures Exchange". FTX was also closely associated with ftx.us, a separate crypto derivatives exchange exclusive only to US residents. Overall, FTX was the second-largest crypto exchange before its collapse.
FTX CEO, The Most Generous Billionaire
Sam Bankman Fried, FTX founder and CEO, was one of the major catalysts behind the company's success. He became the face of the company, as well as crypto at large to some people. His simple public image also earned him titles like "The Most Generous Billionaire". Other factors like high profile celebrity and social media influencer endorsements, as well as major sports events sponsorship events, made FTX hard to miss.