Trading Platform: FTX was a centralized exchange for trading cryptocurrencies like Bitcoin, Ethereum, and a wide range of altcoins. The platform offered spot trading, derivatives including futures, options, and leverage tools for cryptocurrencies.
FTT Token: FTX introduced its own token, FTT, which is considered an altcoin. FTT was used to reduce trading fees on the platform, to earn rewards, and had a significant role in the FTX ecosystem. Before the collapse, FTT was also a substantial part of Alameda Research's assets, an investment and trading firm founded by Sam Bankman-Fried, the founder of FTX.
FTX Collapse: In November 2022, FTX collapsed due to alleged fraud, where customer funds were diverted to Alameda Research, leading to liquidity shortages and the company's bankruptcy. This event significantly impacted the cryptocurrency market, causing a general decline in cryptocurrency values, especially FTT, due to loss of trust.
Impact on the Cryptocurrency Market: The collapse of FTX had wide-reaching repercussions on the crypto market, raising doubts about security and transparency in centralized platforms. It led to a drop in cryptocurrency prices and significant market volatility.
Liquidation and Distribution: After the collapse, FTX entered into a Chapter 11 bankruptcy reorganization, with plans to distribute approximately $16 billion to former clients starting from January 3, 2025, with some of these assets being in stablecoins. This distribution could further affect the cryptocurrency market, especially if other cryptocurrencies are part of these assets.
Policy and Administration Impact: With Trump's inauguration for a new presidency in 2025, this event could add another dimension of impact on the cryptocurrency market, where regulatory policies and the stance of the U.S. government towards cryptocurrencies are significant factors.
In summary, FTX was closely linked to cryptocurrencies through its trading services, the FTT token, and the impact of its collapse on the entire market.