The bankrupt FTX exchange made a significant move on April 18 by transferring assets from its FTT Treasury wallet to a new wallet address. The transferred assets include 195.87 million FTT tokens valued at approximately $247 million, 1,938 ETH valued at around $6 million, and 6.36 million JOE tokens worth $3.25 million. This transfer left the Treasury wallet with only about $205 worth of digital assets, a stark difference from its balance of about $612 million at the beginning of the year.
FTT Token Manipulation and Plummet
FTT, the native token of the now-defunct FTX crypto exchange, has faced a tumultuous journey. It was once used to provide discounts and privileges to customers during the exchange’s prime. However, revelations during the trial of former FTX CEO Sam Bankman-Fried exposed that the digital asset was manipulated to distort the financial records of the exchange and its affiliated trading firm, Alameda Research. As a result, FTT has plummeted by a staggering 98% from its peak of $84. In the past month alone, it has declined by over 34%, with an additional drop of approximately 28% in the last seven days.
Regulatory Issues and Suspension
Amid its bankruptcy proceedings, FTX continues to face regulatory challenges. The Cyprus Securities and Exchange Commission (SEC) extended the suspension of FTX Europe’s subsidiary license until September 2024 on April 16. This directive requires FTX Europe to comply with the Investment Services and Activities and Regulated Markets Law. As a result, FTX Europe is prohibited from offering investment services, conducting business transactions, or accepting new clients. Moreover, the firm cannot advertise investment services. However, it is obligated to complete all pending transactions for itself and its clients upon request. Additionally, the SEC mandates the company to return all funds and financial instruments to its clients.
The bankruptcy of FTX exchange, the manipulation of FTT token, and the regulatory challenges faced by FTX Europe paint a grim picture of the downfall of a once-prominent crypto exchange. The repercussions of these events are not only financial but also impact the trust and credibility of the crypto community in such platforms. It serves as a cautionary tale for investors and traders in the volatile world of cryptocurrencies, emphasizing the importance of due diligence and regulatory compliance.
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