FTX has been in dire straits since the start of November 2022.
What does this mean for FTX, and does it affect the crypto market?
Why Is FTX Going Bankrupt?
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The clash between thesepopular cryptocurrency exchangescan be traced to FTX’s buyout of Binance’s shares in July 2021.
The $2 billion was paid in FTT, FTX’s utility token.
However, the disputes graduated to flat-out conflict on November 6, 2022.
The supposed genesis of this conflict isCoindesk’s releaseof Alameda’s balance sheet four days prior.
This information sparked widespread concerns about the health of FTX, leading to massive asset withdrawals.
This led to a further price plunge of FTT.
FTT’s price drop was terrible news for Alameda, whose assets were mostly in FTT tokens.
As the value of the token depreciates, so does the trading firm.
And if Alameda is in trouble, FTX could also be in trouble.
In the 72 hours before November 8, 2022, FTX saw about $6 billion in net withdrawals.
Not too long after, FTX could no longer process withdrawals.
Did Binance Offer to Buy FTX?
Why Did Binance Withdraw?
He affirmed that the partnership would help FTX clear out its liquidity crunches.
The Binance CEO announced that they would complete due diligence (DD) in the following days.
He claimed that FTX’s issues were beyond Binance’s control or help.
The Zhao and Bankman-Fried/Binance and FTX debacle has rocked the crypto market and shaken the confidence of crypto investors.
The turmoil led to the sharp decline of several cryptocurrencies, and it didn’t stop there.
The FTX and Binance debacle likely caused the plunge in the U.S. stock market.
In the past, FTX helped other firms that had gone bankrupt after misappropriating user funds.
What Will Happen to FTX Users?
Can FTX Users Get Their Crypto Back?
If FTX collapses, its customers will likely be most affected.
According to theFederal Deposit Insurance Corporation, FTX isn’t covered by the same protections as traditional banks.
The disturbances of cryptocurrency exchanges are disturbing for investors, as they are likely to impact their hard-earned money.
Courts typically inform customers when they will be paid and what proportion of their deposit will be returned.
By delivering correct information, a customer’s interest can be efficiently maintained.
With centralized exchanges, you might only use custodial wallets, meaning their assets are held on the platforms.
What Does the Future Hold for FTX?
FTX has already reached out to other companies for joint ventures.
