There have been a number of articles published asking the same question: “Is FTX Crash The End Of Crypto?”. Well, the short answer is – No. Why? Did Lehman Brothers’ bankruptcy and subprime mortgage crisis in 2007–08 spell an end for the stock market? No, it didn’t. Was it bad? Of course. Was it a setback for the stock market? Definitely yes!
Is FTX crash a major setback for crypto market? Unfortunately, yes.
The FTX-Alameda crisis has significantly impacted the crypto market, and it will take time to recover from this setback.
You might want to know how this saga played out—from a buzzing company (FTX) and a towering personality (SBF) to a bankrupt entity and a disgraced figure with so many legal troubles. This debacle has undoubtedly scarred a lot of investors and crypto enthusiasts.
Chain Of Events to FTX bankruptcy
-
Alameda Balance Sheet Leaks
On November 2, Coindesk published an exclusive report based on a leaked balance sheet of Alameda Research, FTX CEO Sam Bankman-Fried’s trading firm. The report revealed that Alameda’s balance sheet is full of FTT tokens, which are issued by the FTX exchange.
It meant that SBF’s trading firm, Alameda, rested on a foundation largely made up of a token created by his sister company rather than an independent asset like a fiat currency or another cryptocurrency.
FTX uses FTT as a reward currency for trading discounts, and Alameda held considerably more tokens than were traded on the market, implying…
