What’s happening at FTX Cryptocurrency Exchange

What’s happening at FTX Cryptocurrency Exchange

FTX was one of the world’s largest exchange for digital money called cryptocurrency. FTX’s problems worsened over the weekend, threatening the entire industry.

Sam Bankman-Fried founded FTX in 2019. He quickly grew the trading firm by attracting the largest investors in Silicon Valley.

Last week, FTX declared bankruptcy. Bankman-Fried resigned. The firm said some money had gone missing. And experts say hundreds of millions of dollars may have been lost.

The collapse of FTX is a shock to the cryptocurrency industry, which has seen its fair share of problems this year.

Bitcoin, the world’s largest cryptocurrency, has fallen around 65 percent in value for the year. And Ether, the world’s second most valuable cryptocurrency, lost 20 percent over the past weekend, CoinDesk data showed Monday.

Why did FTX go bankrupt?

Investors fled FTX last week amid fears over whether the firm had enough cash. And FTX agreed to sell itself to another crypto exchange Binance. But the deal collapsed while Binance was investigating FTX’s finances.

Last Friday, FTX and several associated companies filed for bankruptcy. The firm had valued itself between $10 billion and $50 billion. It listed more than 130 partner companies around the world, the bankruptcy filing said.

And Bankman-Fried who had saved several cryptocurrency companies also resigned as CEO of FTX.

FILE - FTX CEO Sam Bankman-Fried poses for a photo, at an unspecified location, in this undated handout photo obtained by Reuters July 5, 2022. (FTX/Handout via REUTERS)

FILE – FTX CEO Sam Bankman-Fried poses for a photo, at an unspecified location, in this undated handout photo obtained by Reuters July 5, 2022. (FTX/Handout via REUTERS)

Was it hacked?

On Saturday, FTX said it had been “unauthorized access” to their accounts, just hours after the bankruptcy filing. A debate started on social media about the exchange hacked or a company member had stolen money.

Exactly how much money is involved is unclear. But the analysis company Elliptic estimated on Saturday that 477 million dollars were missing from the exchange. FTX’s new chief John Ray III said it halted any trading or withdrawals and took steps to safeguard investors’ money.

Is my bitcoin safe?

Cory Klippsten is the head of the finance company Swan Bitcoin. He said people who own bitcoin should be fine if they keep them away from exchanges like FTX. He said they work like a crypto”gambling website.”

“Any exchange is a security risk,” Klippsten said. Some work better than others, but he said a better choice is to take control of the digital assets. With bitcoin, it is possible to take coins off the exchange, he said.

Is FTX under investigation?

On Sunday, the Royal Bahamas Police Force said it was investigating FTX, adding to the company’s problems. The company had shifted its headquarters to the Caribbean country last year.

Even before the bankruptcy filing and lack of cash, the US Department of Justice and the Securities and Exchange Commission began investigating FTX. The agencies were investigating whether criminal activity or financial crime was committed, a person familiar with the matter said. Associated Press.

What will happen next?

The outcome of FTX’s bankruptcy is uncertain. But its failure will likely lead to the destruction of billions of dollars of wealth and cast even more doubt on cryptocurrencies.

Sequoia Capital has invested in several successful companies that became Apple, Cisco, Google, Airbnb and YouTube. It described the meeting with Bankman-Fried as “talking to the world’s first trillionaire” and decided to invest in FTX.

After FTX went bankrupt, Sequoia has since written down its $213 million in investments to zero. And a pension the fund in Ontario, Canada also wrote down its investment to zero.

Bankman-Fried had been the subject of some criticism before FTX collapsed. He largely operated FTX outside of US oversight from headquarters in the Bahamas. But Bankman-Fried spoke of the need for more regulation of the cryptocurrency industry.

Many proponents of crypto oppose government oversight. Now FTX’s collapse may have helped to argue for tighter regulation.

I’m Caty Weaver.

Dan Novak adapted this story for VOA Learning English based on reporting by The Associated Press.


Words in this story

Exchange — n. an event where people give things of similar value to each other

unauthorized — adj. without permission

access — n. a way of getting near, at or to something or someone

hack — n. to secretly access the files on a computer or network in order to obtain information, cause damage, etc.

play — v. to play a game where you can win or lose money or assets

pension — n. an amount paid by a company or the government to a person who is old or ill and no longer working

regulation — n. an official rule or law that says how something should be done

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