Timeline of Cryptocurrency Exchange FTX's Epic Collapse

The FTX cryptocurrency exchange was valued at $32 billion in February. It imploded within days, causing one of the biggest financial fiascos of the decade.

FTX announced on Jan. 31, 2022, that it had raised $400 million from major investors such as Softbank, Temasek, Tiger Global and others. 

The funding propelled its valuation to $32 billion, more than many long-established companies. As TheStreet wrote at the time, it was a big jump of $7 billion in valuation in just three months.

Ten months later, the platform, which allows you to buy and sell cryptocurrencies like bitcoin (BTC) and ether (ETH), would be bankrupt.

The shock caused by the overnight implosion of one of the firms considered to be the most financially solid in the cryptocurrency industry, is enormous.

In addition to a who's who of investors, FTX also had the biggest names among its ambassadors: NFL legend Tom Brady and his ex-wife supermodel Gisele Bundchen, NBA legends Stephen Curry and Shaquille O'Neal, tennis star Naomi Osaka, entrepreneur star of hit TV show Shark Tank Kevin O’Leary, and "Seinfeld" creator Larry David.

It will take many months to piece together what really happened, establish full accountability and assess collateral damage, due to FTX being a central piece of the cryptocurrency industry.

What is known is that the firm ran out of cash when its customers rushed to withdraw their money by selling the cryptocurrencies they had previously purchased on the platform. FTX was using the client cryptocurrencies as collateral to borrow money which in turn had transferred to Alameda Research, a trading platform with which it shares several links. Alameda used this money to invest in crypto businesses and also for trading operations.

It is important to keep in mind that the fall of FTX is linked to that of Alameda.

FTX and Alameda were founded by former trader Sam Bankman-Fried, 30, in 2017. Bankman-Fried was the institutional face of the cryptocurrency industry. He was a regulator-whisperer and a big donor to the Democratic Party. His meteoric rise made him one of the richest men in the world with a fortune that exceeded $21 billion, but evaporated in a few days between Nov. 8 and Nov. 11.

FTX customers and investors have no certainty today that they will be able to recover their money/cryptocurrencies. Below is the timeline of the series of events which led to the brutal and rapid fall of FTX.

Nov. 2: 

News outlet Coindesk publishes an article raising concerns about the financial health of FTX and Alameda Research. The article claims that the assets of Alameda Research consist of FTT, the cryptocurrency issued by FTX. 

The revelations cause great concern for the following reasons: FTX was using FTT as collateral on its balance sheet. This represented a significant exposure, due to the concentration risk and the volatility of FTT. This therefore raises fears about the capital reserves of Alameda and FTX.

Nov. 6: 

Billionaire Changpeng Zhao, CEO of Binance, FTX's rival exchange, announces that Binance was going to sell about $530 million of FTT, in response to Coindesk's information. That triggers a run on the bank. 

The rush of investors to withdraw their money and cryptocurrencies causes a liquidity crunch. About $5 billion would be withdrawn on Nov. 6 from FTX, Bankman-Fried says.

Nov. 7:  

In a now deleted tweet, Bankman-Fried assures that the assets are fine.

"A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine," he says on Nov. 7. " FTX has enough to cover all client holdings. We don't invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be."

Nov. 8:

Thunderclap: Bankman-Fried and Zhao announce that they have reached an agreement for the acquisition of the empire of the former by the latter. The finalization of the deal is pending due diligence.

Bitcoin is falling. The values ​​of cryptocurrency-related companies like Robinhood and Coinbase are plunging in the stock market.

Nov. 9: 

Another blow: Binance announces that it is withdrawing its acquisition offer because the situation is more serious than the company originally thought.

"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," Binance said.

Zhao sums up the general sentiment in the crypto industry that day: "Sad day. Tried, but