Few stories in the world of cryptocurrencies can compare to the quick drop of FTX when it comes to turbulent trajectories. Kyle Davies, a cofounder of 3AC, added fuel to the fire by putting up a bold strategy for the struggling platform. Davies’ declaration couldn’t have been further from the truth given 3AC’s appalling track record.
In a nutshell, 3AC’s disastrous collapse caused millions in investor cash to disappear. This catastrophe is widely known in the annals of crypto history, thus it is bold and worrisome for Davies, who oversaw it, to provide “guidance” to another platform in trouble.
For FTX, November 2022 was very difficult. The story started when Zhao revealed Binance’s plan to sell its FTT holdings. This announcement caused a significant decrease in the token’s price, which was amplified by low trading volumes and the overt animosity between Zhao and Bankman-Fried.
The repercussions were significant: withdrawals from FTX totaling $6 billion caused FTT to lose 80% of its value in only one day. This financial crisis was so severe that Binance got into a tentative arrangement to purchase FTX in order to ensure the return of consumer funds.
The partnership, nevertheless, was short-lived. The proposed acquisition was clouded by FTX’s financial situation as well as inquiries into FTX’s connections to Bankman-Fried’s other businesses. In the end, Binance withdrew from the contract, leaving FTX to deal with growing difficulties like as a shortage of liquidity.
FTX’s actions grew more frantic as the crisis deepened. An organisation on the verge of collapse was indicated by discussions with Kraken about a potential rescue plan, a request to obtain $10 billion in emergency funding, and a number of high-profile resignations.
In light of this bleak situation, Davies’ most recent statements about what he would do with $10 billion, including buying FTX and changing its operations to resemble 3AC, seem downright irrational. Such proposals scarcely inspire confidence given the outcome of the 3AC project.
