Why did Binance dump FTX? (2024)

Why did Binance dump FTX?

Unraveling the Cryptocurrency Domino Effect

The tumultuous sequence of events began when CZ, the CEO of Binance, publicly announced Binance's intention to sell its FTT holdings, the native token of the FTX exchange. The aftermath was a whirlwind of chaos, culminating in FTX filing for bankruptcy.

Unraveling the Cryptocurrency Domino Effect

The tumultuous sequence of events began when CZ, the CEO of Binance, publicly announced Binance's intention to sell its FTT holdings, the native token of the FTX exchange. The aftermath was a whirlwind of chaos, culminating in FTX filing for bankruptcy.

FTX crashed due to mismanagement of funds, lack of liquidity and the large volume of withdrawals. Binance announced it would buy FTX to prevent a larger market crash, but quickly bailed out of the deal as more news reports of mishandled customer funds surfaced.

According to U.S. Attorney General Merrick Garland, Binance broke American law and made it simple for thieves to transfer money that had been pilfered or illegally obtained. According to the indictment, Binance violated sanctions by facilitating more than 1.1 million transactions between Americans and Iranians.

Prosecutors accused Bankman-Fried, once the poster boy for virtual currencies, of stealing about $10bn, using customers' funds to make risky investments, buy property and fund political campaigns. The crypto entrepreneur, 31, now faces up to 110 years behind bars.

Binance is in trouble because it is facing legal and regulatory challenges from various authorities around the world, such as the US, the UK, Japan, Germany, Singapore, and more.

Evan Luthra, an app developer, entrepreneur and angel investor, told CNBC he lost $2 million in the collapse of FTX. Luthra said he knew when FTX filed for bankruptcy protection in late 2022 that he wouldn't have “access to any of this money for the next few years.” He continues to speak at crypto conferences.

A surge of customer withdrawals, due to concerns over this questionable financial valuation practice and unusually close relationship with Alameda, pushed FTX and Alameda into bankruptcy and shook the volatile crypto market, which lost billions and fell below a $1 trillion valuation.

FTX founder Sam Bankman-Fried and senior staff spent customer funds on technology investments, luxury real estate and political contributions, among other things. The missing funds are at the heart of Bankman-Fried's criminal trial, which kicked off in Manhattan federal court this week.

FTX was a global cryptocurrency exchange that facilitated spot, derivatives, and leveraged trading for commonly traded cryptocurrencies and NFT collectibles until it went bankrupt and its executives were convicted.

Why is Binance not allowed in the US?

“Because Changpeng Zhao knowingly operated a financial platform without basic anti-money laundering safeguards, the company caused illegal transactions between U.S. users and users in sanctioned jurisdictions such as Iran, Cuba, Syria, and Russian-occupied regions of Ukraine – transactions for which Binance profited ...

The SEC said the operator of Binance was not a registered corporation in the Philippines, and was operating without the necessary licence and authority to sell or offer any form of securities.

Binance is a secure exchange and has established itself as a leader when it comes to security approaches with concepts like Proof of Reserves. The platform has taken great lengths to enhance its security and as of 2024, it is one of the most secure crypto platforms available.

What Was Sam Bankman-Fried's Net Worth? According to Forbes, Bankman-Fried once had a net worth of $26.5 billion, but it fell to roughly $16 billion and then to nearly zero in one week in November 2022. 201 The cryptocurrency entrepreneur was convicted of one of the biggest financial frauds in American history on Nov.

Sam Bankman-Fried, who once ran one of the world's biggest cryptocurrency exchanges and is facing decades in jail, will not face another trial, US prosecutors say. The 31-year-old was found guilty of fraud and money laundering last month.

The bankruptcy of FTX, a Bahamas-based cryptocurrency exchange, began in November 2022. The collapse of FTX, caused by a spike in customer withdrawals that exposed an $8 billion hole in FTX's accounts, served as the impetus for its bankruptcy.

Retailers including Lowe's, Best Buy updated investors

Prices of major cryptocurrencies including bitcoin and Binance Coin are lower after The Wall Street Journal reported that Binance's founder plans to step down and plead guilty to violating criminal U.S. anti-money-laundering requirements.

The world's largest cryptocurrency exchange, Binance, has pleaded guilty and agreed to pay $4.3 billion to settle criminal money laundering charges levied by the U.S. Department of Justice. Binance founder and CEO, Changpeng Zhao, also known as CZ, has also pleaded guilty and agreed to step down from his position.

Overall, Binance offers a range of security features to protect user funds, although the platform has faced compliance issues and accusations from regulators. Despite these challenges, Binance remains the largest crypto exchange globally and continues to serve millions of users.

Whether customers are repaid may largely depend on how much money FTX is able to scrape together. As of June, the company had recovered around $7 billion in assets—but FTX has signaled that it's confident it can reclaim enough to pay customers back in full.

Is all money in FTX lost?

Failed crypto exchange FTX has announced an updated plan for sending 90% of distributable funds—money it has recovered—to former customers in its bankruptcy proceedings, but that doesn't necessarily mean they will get back 90% of the money they lost.

Bankrupt FTX won't be restarting, but former customers will get money back in full.

Currently, around $30 billion to $35 billion worth of crypto is locked up in cryptocurrency bankruptcies, with around 15 million people affected, according to Xclaim. There was about $16 billion in crypto stuck in FTX when it collapsed, according to Xclaim.

Prosecutors allege that Bankman-Fried, 31, stole billions of dollars from investors and customers in order to fund a lavish lifestyle in The Bahamas and buy the influence of politicians, celebrities and the public.

On November 11, 2022 $477 million was stolen from cryptoasset exchange FTX, just as it was collapsing into bankruptcy.