FTX turmoil summary

Summary at the time of writing (21:00 on November 10)

  1. FTX.JP, the Japanese version of major overseas virtual currency exchange FTX, receives a business suspension order from the Financial Services Agency.
  2. FTX deposits and withdrawals are restricted, and customer assets of about 1 trillion yen are exposed to the risk of not being able to refund.
  3. It all started with suspicions about FTX’s financial status. The company’s tokens have become the majority of assets, and the ability to repay has been questioned. As a result, the major virtual currency exchange Binance announced the sale of its FTT tokens, and the FTT tokens crashed, dragging down the entire market.
  4. FTX and Alameda Research are related to a large number of PJs in the cryptocurrency market through investments, etc., and there are concerns about the wide-ranging impact of cash sales.
  5. It is unclear whether the assets of FTX users can be withdrawn, and it is currently suspended.
  6. The Japanese version is supposed to be managed separately according to Japanese regulations, but the actual situation is unknown. Suspicion of misappropriation of customer assets.

Cryptocurrency exchange FTX.JP received a business suspension order from the Financial Services Agency.

Source: https://lfb.mof.go.jp/kantou/kinyuu/pagekthp0270000011.html

Over the past few days, the cryptocurrency market has taken a big hit. It is believed that the origin of these is the exchange with Binance, which is also a virtual currency exchange and a competitor of FTX.

CZ’s FTT liquidation decision tweet

CZ’s FTT move tweet

What is $FTT?

  • Exchange token of virtual currency exchange FTX
  • There were various benefits at the exchange by owning
  • As of November 8, the market capitalization is about 400 billion yen.
  • Currently, it is about 50 billion yen and has plummeted to about 1/8
  • Image source: CMC

Both FTX and Binance have had a reputation as being globally trusted among major overseas cryptocurrency exchanges. Each representative is nicknamed SBF/Afro/Sam on FTX and CZ on Binance.

FTX also owns Alameda Research as a subsidiary. This company has invested in so many chains and PJs such as DeFi, GameFi, and NFT. Representative ones are Solana, STEPN, etc.

The problem this time was the financial situation of FTX and Alameda Research.

Rumors spread that there were concerns here, and despite FTX’s Sam denying it, Binance’s CZ decided to liquidate the FTT token.

The suspicion is that most of the assets held are made up of the FTT market price of the company’s own token, and the ability to actually pay it back is insufficient. Also, is customer funds misappropriated? That’s what it was.

Reference:
https://www.coindeskjapan.com/164864/?utm_source=twitter&utm_medium=ifttt 
https://www.bloomberg.co.jp/news/articles/2022-11-10/RL521SDWX2PT01

In response to CZ’s FTT token liquidation statement, Alameda Research CEO Caroline counterattacked by saying that if you sell it, you are ready to buy it for $ 22, but in reality it hardly worked.

And just one day later, FTX’s Sam announced a strategic partnership — in fact, a takeover offer — from Binance.

In response to this, the FTT token jumped for a moment, but after that it crashed at a tremendous speed, involving the entire cryptocurrency market.

Source: trading view FTT/USDT daily

In addition, this acquisition proposal was only a story that Binance could cancel, so it may not actually be completed. There was also a guess.

If there is actually not enough funds in FTX, users will not be able to withdraw money. This problem would have been avoided if Binance acquired FTX.

Unfortunately, the next day, Binance announced that it would be abandoning the acquisition.

FTX Acquisition Abandoned Tweet

In this way, FTX’s substantial bankruptcy has almost been recognized.

FTX-Sam’s apology tweet

What will happen next?

The information is confusing and the situation is unclear, so we still do not know what will happen.

U.S. authorities like the SEC have also begun investigating.

Reference:
https://www.bloomberg.co.jp/news/articles/2022-11-10/RL4NXEDWX2R801?srnd=cojp-v2

In any case, if a situation where 1 trillion yen of customer assets cannot be refunded occurs, the impact on the market will be enormous. It is undeniable that there is a risk that the virtual currency market will fall further due to the psychology that even a major exchange cannot be relieved.

FTX’s Sam is currently looking for a backer, but it’s unclear if he’ll find one.

FYI: Sam Bankman-Fried is seeking up to $9.4 billion to save FTX, reports Reuters.

Strongly FTX-related projects such as Solana have fallen particularly sharply on concerns that they may be sold for cash.

Source: trading view SOL/USDT daily

The future virtual currency market will be greatly affected by this story for a while.

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