FTX, one of the world’s largest cryptocurrency exchanges, announced on Friday it will file on bankruptcy, with its CEO, Sam Bankman-Fried, stepping down in the wake of a trading scandal that has embroiled the firm in regulatory inquiries.
The company’s dramatic unraveling, which intensified in the past few days, marked a stunning collapse of what was believed to be one of the world’s most stable crypto firms. Instead, there are now angry investors and a growing number of government entities trying to determine what happened.
Bankman-Fried, who also runs Alameda Research, allegedly used $10 billion worth of FTX customer deposits to fund transactions by the trading firm, the Wall Street JournalThursday. Bankman-Fried, in a since-deleted tweet on Monday, said FTX did not make bets with customers’ assets. FTX is headquartered in the Bahamas, but Bankman-Fried has spent much of the year working to gain influence in Washington, both on Capitol Hill and with regulators.
The earthquake in the already volatile crypto industry set off a flurry of activity among regulators and policymakers. In the past six months, four crypto institutions — crypto hedge fund Three Arrows Capital, lenders Voyager Digital and Celsius Network and stablecoin issuer Terra Luna — all collapsed.
Policymakers in Washington, meanwhile, are still struggling to make sense of FTX’s implosion, searching for more clarity about what happened and how to craft federal guardrails for the industry to prevent a repeat.The fate of a measure pushed by Bankman-Fried — sponsored by Sens. Debbie Stabenow and John Boozman , the top lawmakers on the Senate Agriculture Committee — is now in doubt.
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