If this theory is true, the scam caused by caused “really monumental” and recalled that CEO Enron went to jail for “less serious violations than this.”

ftx

Sam Bankman-Fried, CEO of the exchange FTX went bankrupt, perhaps one of the most hated people in the world today. After being hailed as the savior of crumbling projects, the personal motives of his actions are now being exposed.

Amid concerns about contagion , investor confidence dropped seriously. Extreme fear is covering the market, but industry commentators continue to push .

One of them is the President of El Salvador, Nayib Bukele. He said that was created precisely to stop the bad guys from scamming people, including Sam Bankman-Fried's "relief and reassignment packages".

On the other hand, there have been reports that the exchange may have more than 1 million creditors.

Than 1 million creditors

Last week, when the exchange filed for voluntary Chapter 11 bankruptcy protection, it indicated there could be more than 100,000 creditors. Now, according to an updated profile, that number seems to be well over 1 million. The company's attorney said:

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“In fact, there could be more than 1 million creditors in Chapter 11 cases.”

This hints at the massive impact of the crash on both traders and regular retail users. Even that is likely to have the most severe impact on the industry.

FTX contradictory Bitcoin

In a recent tweet, President Salvador emphasize FTX is the opposite Bitcoin while criticizing the former CEO of the platform who is caught in the middle of a lot of trouble. Bankman-Fried's "effective altruism" movement is now at the center of the debate. According to Ram Ahluwalia, CEO and co-founder of an analytics firm, with reports of his company insolvent, bailouts for Voyager and BlockFi now seem “really insidious.” .

Follow hypothesis of Ahluwalia, FTX positions themselves as "white knights" when in reality they are "criminals". He explained that the exchange attracts creditors “to delay and slow down margin calls.” It is well known that FTX has “hundreds of millions of dollars in outstanding loans with Voyager”.

“When you can't pay off your debt, the debtors take your equity and own your company. FTX sought to acquire Voyager to prevent this. The new parent company assumes the legal responsibility of the subsidiary. Alternatively, FTX could buy back their inflated but truly worthless $32 billion equity.”

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The analyst further confirmed that both FTX and trading firm Alameda had holes in their balance sheets. For debt obligations, the two companies have loans that they need to repay. On the asset side, retained earnings offset losses because of negative net present value (NVV). Ahluwalia announced its decision to acquire Voyager and BlockFi providing temporary patches for both issues.

“This plan requires the target to be reputable to the acquirer and also requires reverse due diligence (since the form of payment is FTX equity).”

FTX: Nice next Enron bigger?

The sudden collapse of FTX angered investors. The emergence of reports claiming SBF deploys client funds from the exchange to cover the losses of its failed empire has led many to call for his imprisonment. The current investigation from the US Department of Justice is looking into whether SBF was simply incompetent or if he was intentionally misleading users.

But if Ahluwalia's hypothesis turns out to be true, this long-standing fraudulent nature will be more serious than that of the disgraced energy giant Enron. The company was engaged in shady off-the-books accounting and business practices in the early 2000s.

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As previously reported, FTX is currently facing an investigation by the securities regulator and financial investigators for potential misconduct. Their recently announced debit card program with payments giant Visa was also subsequently terminated.

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