On Dec. 4, 2022, a report details that FTX-based synthetic stocks may have been used to manipulate the value of AMC shares.
In May 2021, FTX offered 36 tokenized stocks, but speculators believe it’s questionable whether or not the firm actually held the real stocks in the first place.
FTX has been under the microscope ever since the exchange collapsed during the first week of November 2022.
Since then, there’s been a lot of information to process, and new information released.
On Sunday, a report details that tokenized stocks listed on FTX may have been used to “manipulate the price of AMC shares.”
The publication thechainsaw.com and its report show that while FTX’s terms of service said the firm’s synthetic stocks were backed 1:1, that may not have been the case.
“FTX listed wrapped AMC token[s] for trading on its synthetic derivatives trading platform,” The Chainsaw said on Twitter.
Additionally, thechainsaw.com published another report that details that Gamestop and Tesla shares could have been manipulated as well.
Furthermore, the researchers note that the leaked FTX balance sheet disclosed by the Financial Times (FT) shows the company only holds Robinhood (HOOD) shares.
There’s no documentation (as of right now) that’s been made public that shows FTX actually owned any of the 36 tokenized stocks it listed.
Billionaire investor Ken Griffin, the founder and CEO of multinational hedge fund Citadel, warned that the collapse of cryptocurrency exchange FTX could weaken confidence in financial markets at large and hurt the ability of younger investors to save for retirement.
Ken Griffin told Fox Business, “FTX is one of these absolute travesties in the history of financial markets.”
The firm’s bankruptcy may affect up to 1 million creditors and comes amid reports that at least $1 billion in client funds disappeared.
The Wall Street Journal is now reporting that ex-CEO Sam Bankman-Fried cashed out $300 million during a $420 million raise from several investors last year for personal use.
Sam Bankman-Fried is now facing a class-action lawsuit that was filed on November 11th, 2022.
Celebrities named in the lawsuit include Steph Curry, Shaquille O’Neal, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary who allegedly helped Bankman-Fried promote the exchange.
Join the newsletter to stay informed by receiving market alerts and notifications straight to your inbox.
Citadel’s Ken Griffin Says Retail Investors May Likely Ditch the Markets
Griffin expressed concern that losses sustained by younger investors who lost money due to FTX may make them less likely to invest their savings in capital markets, including traditional instruments like stocks and bonds.
“The confidence, though, of a generation in financial markets has also been shaken. That’s really awful because the 20-some-year-olds to 40-year-olds who are so engaged in crypto — they’ve got to save for their retirement, and if they don’t believe or trust in financial markets, this is a huge problem. They need to own stocks, they need to own corporate debt, they need to partake in our global capital markets,” Griffin said.
Citadel is currently partnering with Virtu, Schwab, Paradigm, Sequoia, and other Wall Street giants to form EDXM Crypto Exchange.
A cryptocurrency exchange that is supposed to provide transparency and lower transaction costs through the use of high liquidity and tight spreads.
But concerns are growing within the retail investor community as Citadel enters the crypto space, calling it an outrage due to the hedge funds’ long history of abuse of power.
“The bottom line is American investors have really gotten hurt here to the tune of hundreds of billions of dollars in decline in market cap in crypto over the last two years. I mean that really strikes at the entire core essence of what investor protection is all about,” Griffin said.
Concerns in the retail community are growing over Ken Griffin’s Citadel’s involvement in the crypto space.
Citadel is partnering up with Charles Schwab, Fidelity, Sequoia, Paradigm, and Virtu to launch EDXM, a cryptocurrency exchange.
Users on Twitter are weary about the potential crime a powerhouse such as these Wall Street giants may cause, especially after the collapse of FTX.
#CITADELSCANDAL has been trending on social media platforms such as Twitter and Truth after numerous counts of conflicts of interest have been shared by the retail community.
If there’s one thing that the ‘meme stock’ frenzy has shown us, it’s that it wasn’t a phase.
The ‘meme stock’ frenzy represents the empowerment of retail investors against Wall Street injustices.
Retail investors are leaving a strong imprint in finance; one could argue that finance is now becoming somewhat of a culture.
This ‘culture’ is shared in both the stock and cryptocurrency markets where retail investors want a leveled playfield.
Social media is now making it easier to expose Wall Street fraud and manipulative tactics used to take advantage of investors.
Join the newsletter to stay informed by receiving market alerts and notifications straight to your inbox.
FTX Scandal: What Went Wrong?
Cryptocurrency exchange FTX filed for Chapter 11 bankruptcy on November 11, 2022, after the company’s valuation dropped from $32 billion to bankruptcy in only a matter of days.
The collapse of the cryptocurrency exchange dragged founder and CEO Sam Bankman-Fried’s $16 billion net worth to near-zero.
FTX was responsible for dropping the crypto industry below $1 trillion.
On November 16, a class-action lawsuit was filed in a Florida federal court, alleging that Sam Bankman-Fried created a fraudulent cryptocurrency scheme designed to take advantage of unsophisticated investors from across the country.
Which celebrities were affected by FTX?
Celebrities named in the lawsuit include Steph Curry, Shaquille O’Neal, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary who allegedly helped Bankman-Fried promote the exchange.
FTX became one of the largest crypto exchanges in just three years with a valuation of $32 billion.
Bankman-Fried used aggressive marketing, including a Super Bowl ad campaign, and the purchase of naming rights to the home of the Miami Heat basketball team.
He became known for his political lobbying and donations as well as for working to support the cryptocurrency industry more broadly.
As values plunged in early 2022, he facilitated deals totaling about $1 billion to bail out cryptocurrency companies struggling as a result of the declines in token prices.
Conflict of Interest Created Mass Selloff in FTX
FTX’s collapse took place over a 10-day period in Nov. 2022.
The catalyst for the crisis was a Nov. 2 scoop by CoinDesk that revealed that Alameda Research, the quant trading firm also run by Bankman-Fried, held a position worth $5 billion in FTT, the native token of FTX.
The report revealed that Alameda’s investment foundation was also in FTT, the token that its sister company had invented, not a fiat currency or other cryptocurrency.
That prompted concern across the cryptocurrency industry regarding SBF’s companies’ undisclosed leverage and possession of assets.
Here’s when things really started going downhill for FTX.
Binance, the world’s biggest crypto exchange, announced on Nov. 6 that it would sell its entire position in FTT tokens, roughly 23 million FTT tokens worth about $529 million.
Binance CEO Changpeng “CZ” Zhao said the decision to liquidate the exchange’s FTT position was based on risk management, following the collapse of the Terra (LUNA) crypto token earlier in 2022.
By the next day, FTX was experiencing a liquidity crisis.
Bankman-Fried attempted to reassure FTX investors that its assets were stable, but customers demanded withdrawals worth $6 billion in the days immediately following the CoinDesk report.
Bankman-Fried searched for additional money from venture capitalists before turning to Binance.
FTX: A Pyramid Scheme Created from Mass Marketing?
Within hours of filing for bankruptcy, FTX was hacked.
The exchange noted that ‘unauthorized transactions’ close to half a billion dollars in total were stollen from several wallets during a period of days.
Since the incident, regulators of the Bahamas have frozen FTX’s assets, and the company has strongly advised against customer deposits.
What’s occurred with FTX is an ongoing investigation and lawsuit against now ex-CEO Sam Bankman-Fried.
So, was FTX just a scam to laundering money through the use of unauthorized stock tokens and covered by the hack that occurred?
Or was this just a poorly managed incident that occurred without motive?