CRASH COURSE

FTX, along with 130 other entities, filed for bankruptcy on November 11. The company said it has $10 billion (Rs 81,680 crore) to $50 billion (Rs 4 lakh crore) in liabilities, and more than 100,000 creditors

WHY FTX COLLAPSED

Against its own terms of service, FTX lent $8 billion

(Rs 65,344 crore) worth of its customers’ assets to Alameda Research, a trading firm specialising in cryptocurrencies, also promoted by Bankman-Fried

In return, it accepted its own digital tokens FTT that have no underlying value, as collateral tokens, creating a financial hole

Bankman-Fried was accused of siphoning off millions of dollars from the company accounts

Suspicious bets and trades led to a run on the exchange and probes of fraud from federal authorities. Customers began to demand withdrawals to the tune of $6 billion (Rs 48,600 crore)

A failed buyout by Binance, the world’s largest crypto exchange, was the last nail in FTX’s coffin. In 2019, Binance had invested in FTX, and reportedly held 5 per cent in the firm, but exited last year after receiving $2.1 billion (Rs 17,000 crore) in Binance’s own stablecoin and FTT tokens