Share:
  • As per FTX's former CEO, Sam Bankman-Fried, Alameda borrowed more money from the exchange than it had as collateral.
  • SBF, along with Tom Brady and Steph Curry, has been named in a class action lawsuit seeking $11 billion in damages.
  • FTX token (FTT) price has lost more than 94% of its value since the exchange's collapse on November 6.

FTX exchange and its native token FTT together triggered one of the biggest crashes this year, which the crypto market is still reeling from. In the wake of piling lawsuits and regulatory noose tightening, FTX's CEO Sam Bankman-Fried (SBF) has come forward to explain what went wrong and inform on future plans. 

FTX faces class action lawsuit

FTX exchange CEO SBF has been named in a class action lawsuit by an Oklahoma resident, according to a filing on November 15. The plaintiff claims violation of Florida's law and damages worth more than $11 billion to consumers.

Along with the CEO, celebrities such as Tom Brady, Stephen Curry, Shaquille O'Neal, Kevin O'Leary, and many more have been named in the class action. The lawsuit holds them responsible for the damages suffered by FTX users, stating,

"All parties who either controlled, promoted, assisted in, and actively participated in FTX Trading and FTX US (collectively, the "FTX Entities"), offer and sale of unregistered securities in the form of yield-bearing accounts (YBAs) to residents of the United States."

The lawsuit came days after the cryptocurrency exchange filed for bankruptcy, which SBF states were one of his biggest regrets.

SBF unsatisfied with the bankruptcy decision

In an interview with Vox, FTX's former CEO said that one of the biggest reasons behind FTX's downfall was the "messy accounting" that emerged during the Terra-LUNA collapse. 

As per SBF, after Alameda faced losses in May 2022, FTX attempted to rescue it by lending money from the exchange’s balance sheet. However, due to the messy accounting, FTX failed to realize that Alameda had borrowed far more money than the collateral required.

He further stated that he intended to pursue more fundraisers, but FTX's bankruptcy filing barred him from doing so. The executive believed that raising more money would have helped FTX end the $8 billion liquidity crisis, and withdrawals would have resumed within a month.

He added that his only goal from here on is to secure this funding to make account holders whole again.

SBF Twitter conversation with Vox

SBF Twitter conversation with Vox

Surprisingly, SBF also stated that all his statements about making regulations were mostly just for Public Relations (PR). He added that regulators only made everything worse and that they did not protect consumers at all as they can’t distinguish between the good and bad.

FTX Token (FTT) price continues to lose value

FTX exchange’s collapse began after Binance CEO Changpeng Zhao (CZ) publicly announced that he was going to offload his FTT holdings. While the exchange in question attempted a deal, it fell through, triggering a massive selling frenzy.

As a result, the FTX token (FTT) price crashed 91% between November 6 and 9, taking the rest of the market down with it. Although Bitcoin price and Ethereum price tried to weather through the initial fallout, the markets gave in, catalyzing a chain reaction that caused the total market capitalization to shed 22% since November 6.

Total crypto market capitalization 1-day chart

Total crypto market capitalization 1-day chart

While retail investors are coming to terms with their losses, so are institutions. One such entity is Temasek, a Singapore government-owned holding company. An announcement on November 16 revealed that Temasek was going to write down its $275 million investment in FTX.

Regardless of Temasek’s losses, Bitcoin price continues to consolidate around $15,500, allowing altcoins to recover. As a result, the total market capitalization has bounced back to $787 billion, but investors need to be cautious as there are major regulatory developments or reactions yet to happen that could trigger another sell-off.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Near Protocol Price Prediction: NEAR pumps 10% as investors envision another buy opportunity here

Near Protocol Price Prediction: NEAR pumps 10% as investors envision another buy opportunity here

Near Protocol (NEAR) price is trading with a bullish bias, with a sustained series of higher highs since the last week of January. With investors groping for discounted entry points, NEAR could correct before the next leg up.

More Cryptocurrencies News

Ethereum price teases with a breakout, eyes $3,200 milestone as ETH bulls show resolve

Ethereum price teases with a breakout, eyes $3,200 milestone as ETH bulls show resolve

Ethereum (ETH) price consolidation within the ascending parallel channel has lasted since October, with the Proof-of-Stake (PoS) token making multiple attempts to breakout. As it stands, Ethereum continues to outperform Bitcoin (BTC) with double the gains.

More Ethereum News

Solana Price Prediction: SOL could easily go all the way back to $79.49 low

Solana Price Prediction: SOL could easily go all the way back to $79.49 low

Solana (SOL) price is trading with a bearish bias, recording a series of lower highs and lower lows since mid-February. The downtrend has seen the Layer 1 (L1) token drop below the midline of the market range between $79.49 and $126.27.

More Solana News

BNB price eyes $400 as Binance Coin bulls keep showing up

BNB price eyes $400 as Binance Coin bulls keep showing up

Binance Coin (BNB) price has formed lower highs and lower lows over the past few days, but the bulls continue to maintain a strong presence in the market. BNB has also steadfastly shown strength despite the recent uncertainty in the market as altcoins awaited cues from Bitcoin (BTC) price.

More Binance News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis

BTC

ETH

XRP