The crisis roiling the crypto industry captured public attention with the remarkable collapse of FTX this past November and the arrest soon after of the exchange’s founder,
But the industry’s troubles began months before—and has continued to spread since. Below is a look at the key dates in the crisis.
- Feb. 13: FTX and other crypto companies run their first Super Bowl ads as they push to draw more investors and boost awareness of the industry. Bitcoin is trading back down at $42,259.28 as the market starts to price in the Federal Reserve’s coming rate hikes. The previous November, it had peaked at $67,802 as investors rushed into riskier assets.
- May 4: The Fed raises its benchmark rate by a half percentage point to tame soaring inflation, marking the sharpest increase since 2000. The central bank’s interest-rate increases over coming months will spark a selloff in speculative investments, including bitcoin. Bitcoin is trading at $39,780.
- May 9: Cryptocurrency terraUSD, a stablecoin that is supposed to keep its value at $1, falls below its fixed value, triggering a selloff. Along with its sister coin, luna, terraUSD loses $40 billion in value. Bitcoin is trading at $31,075 late in the day, down 10% from the previous day.
- June 12: Crypto lender Celsius tells users it is freezing all account withdrawals, citing extreme market conditions.
- June 17: Babel Finance, a crypto lender based in Hong Kong, also tells customers it is suspending withdrawals, citing “unusual liquidity pressures.”
- June 27: Hedge fund Three Arrows Capital, which had invested heavily in terraUSD, defaults on loan payments to crypto lender Voyager. Three Arrows was heavily leveraged with billions of dollars of loans that it defaulted on. Its other crypto lenders included Genesis and BlockFi.
- June 29: A British Virgin Islands court orders Three Arrows Capital to liquidate after creditors sue the crypto hedge fund for failure to repay debts, the Journal reports.
- July 5: Voyager files for bankruptcy protection, saying it faced a “run on the bank.”
- Nov. 2: CoinDesk publishes an article saying a big chunk of Alameda Research’s assets consist of a token created by FTX, which the firm might have overvalued, setting off a run on FTX.
- Nov. 8: FTX agrees to be taken over by rival Binance after succumbing to a sudden liquidity crunch, with users pulling money and cryptocurrency out of their accounts en masse.
- Nov. 9: Binance walks away from deal to rescue FTX, says the issues it found at Mr. Bankman-Fried’s firm were beyond its control.
- Nov. 10: WSJ reports FTX lent billions of dollars worth of customer assets to fund bets by Alameda Research
- Nov. 11: FTX files for chapter 11 bankruptcy protection.
- Nov. 28: Crypto lender BlockFi follows FTX into bankruptcy.
- Dec. 12: FTX’s Sam Bankman-Fried arrested in the Bahamas after federal prosecutors in New York file criminal charges, and he is later transferred to U.S. custody.
- Dec. 22: Mr. Bankman-Fried is released on $250 million bond and ordered to stay in his parents’ Palo Alto, Calif., home.
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- Jan. 12: SEC sues crypto firms Genesis and Gemini over a lending product that allegedly violated investor-protection laws.
- Jan. 18: Crypto-focused media group CoinDesk hires investment bankers to help it explore options, including a sale.
- Jan. 19: Crypto lender Genesis files for chapter 11 bankruptcy protection. FTX’s new CEO says he is looking into the possibility of reviving the bankrupt exchange as he works to return money to customers and creditors.
This explanatory article might be periodically updated.
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