Bankrupt FTX exchange has agreed to a $12.7 bln settlement with the CFTC after months of negotiations. If approved by the court, the CFTC will not insist on FTX paying a $2.7 bln civil monetary penalty. How high-profile has this case been? And how has it affected the crypto market at large?
The FTX saga turned out to be extremely high-profile. This happened, firstly, amid the market’s pronounced appeal for the activities of cryptocurrency exchanges. At that time, investors did not have much experience in the bankruptcies of such entities. Secondly, everything happened very quickly. Large players began to de-risk and bailed out of the name, followed by a deluge of rank-and-file investors. The situation quickly snowballed, triggering a flash crash.
The current outcome, when a settlement agreement is concluded between the CFTC and FTX, can be considered optimal. It will not require the bankrupt exchange to seek additional financing and will allow it to focus on performing its current obligations. In our view, this is the best possible option for both the business and consumers.
In addition, the news has had a positive impact on the entire cryptocurrency industry, since it shows that even the most deadlocked situations can be rectified.