The Facts
Amid a rush of customer withdrawals that left the firm teetering on the edge of collapse, cryptocurrency exchange FTX announced Friday that it's filing for bankruptcy, with founder Sam Bankman-Fried stepping down as CEO.
Users began withdrawing their funds from FTX last week after an article appeared on the crypto news site CoinDesk suggesting that Alameda — a hedge fund owned by Bankman-Fried — held billions of dollars worth of FTX's own currency, FTT, from clients' accounts to use as collateral in further loans.
The Spin
Narrative A
FTX was seen as one of the more reputable firms in the crypto world, and its founder was considered a Capitol Hill darling, having donated millions to political campaigns and helped write legislation around cryptocurrencies. This shocking twist — which will have ripple effects across the crypto world — brings all of that into question and renews calls for more regulation.
Narrative B
All of these problems stem from the lack of clarity provided by US legislators, which has driven 95% of the crypto market offshore. They are now largely powerless to retrieve the funds, and it makes no sense to further punish US crypto companies for these mistakes with a regulatory crackdown.
