It's one of the last surviving remnants of former trader Sam Bankman-Fried's cryptocurrency empire.
FTT, the cryptocurrency spun off and attached to the bankrupt cryptocurrency exchange FTX, continues to trade on many platforms.
The coin, like many tokens attached to an ecosystem, provided an indication of the valuation of FTX because the firm was its main sponsor. It is therefore surprising to see that, despite the exchange filing for Chapter 11 bankruptcy on November 11, FTT continues to trade.
However, the price has dropped significantly. FTT’s price is down 60% in the past seven days according to data firm CoinGecko. In the last 24 hours, the price has fallen by 4.2%. The market value is estimated at just over $510 million. It should be noted, however, that FTT's price has collapsed by 98.1% compared to its all-time high on September 9, 2021. At the time, the market capitalization had risen to $9.8 billion.
It is unclear how many FTTs are currently in circulation, but CoinGecko data show that a maximum of 328,895,112 coins have been issued.
FTT Was an Important Piece for FTX
FTX used FTT as collateral for its loans. And it was the decision of billionaire Changpeng Zhao, CEO of Binance, FTX's rival exchange, to sell FTT of about $530 million that triggered a run on the bank. This rush of investors to withdraw their money and cryptocurrencies caused a liquidity crunch, which in turn, and with allegations of misuse of client funds, forced FTX to file for bankruptcy.
As a crypto exchange, FTX executed orders for their clients, taking their cash and buying cryptocurrencies on their behalf. FTX acted as a custodian, holding the clients’ crypto currencies.
FTX then used its clients’ crypto assets, through its sister company’s Alameda Research trading arm, to generate cash through borrowing or market making. The cash FTX borrowed was used to bail out other crypto institutions in the summer of 2022.
At the same time, 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.
The bankruptcy of FTX and the rest of the Bankman-Fried empire came within days. The unexpected overnight implosion caused a shock as the company was valued at $32 billion in February and had big star ambassadors like NFL‘s Tom Brady and his ex-wife, super model Gisele Bundchen, basketball player Stephen Curry and Larry David, creator of the hit TV series "Seinfeld." They are all defendants in a recent class action lawsuit for fraud, filed in Florida.
Regulators -- the Department of Justice (DoJ) and the U.S Securities and Exchange Commission (SEC) -- have also opened investigations into FTX and Bankman-Fried, who was forced to resign as CEO on November 11.
Bankman-Fried was questioned on November 12 by the police in the Bahamas, where he lives and where FTX was based. He is free for the moment. No charges have yet been filed against him.
The Democrats, whose campaigns he supported, also want to grill him under oath.
The FTX debacle could cost many investors who had accounts on the platform and investors who invested in the firm millions of dollars.
