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Originally Posted by Winsor_Pilates
What's the deal with FTX?
I'd never heard of it until this week but not keep reading about it and the owner making massive political funding to the US elections
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It's a very ugly situation. The founder of FTX is also the founder of another crypto investment fund, Alameda, which I think he actually launched before FTX. The relationship between these has been somewhat opaque, but it has seemed for some time that FTX was at least providing privileged information to the investment fund to trade on, and probably was also providing a tonne of backdoor financing to them to use in high risk trades. Nonetheless, FTX grew to be one of the top 3-4 exchanges in the space based on volume.
The founder of Binance, CZ, appears to have had some knowledge of the holes in FTX's books, and tweeted concerns about their solvency and that Binance was going to start liquidating $1B worth if FTX's own token, FTT. This caused FTT to dump and caused a run on FTX. Because FTX likely had a whole bunch of leverage on FTT, and the price of FTT was dumping, they don't have the funds to available to handle a bank run. Binance then said they would step in to acquire FTX to bailthem out, but that deal now looks like it won't go through and CZ may have just killed off a major market player and competitor of Binance, at the expense of everyone who had funds held with them.
It's just pretty deplorable all around.