FTX founder Sam Bankman-Fried may be extradited to the United States for questioning, according to reports from three persons with knowledge of the situation, according to Bloomberg News on Tuesday.
Fears over the future of the cryptocurrency business have been stoked by SBF’s defunct crypto exchange FTX, which disclosed a ‘severe liquidity crisis’ and filed for bankruptcy in the US last week.
Since that time, authorities have started looking into the business, and lawmakers have demanded more precise regulations.
Companies Filing For Bankruptcy
With many of them estimating their exposure to the troubled exchange in the millions, numerous cryptocurrency companies have also been preparing for a fallout from the FTX collapse. BlockFi has stopped withdrawals and is thinking about filing for bankruptcy over the weekend.
Friday’s bankruptcy filing by FTX sent tsunami-like waves through the cryptocurrency sector, which has experienced its fair share of volatility and turbulence this year, including a significant drop in the price of bitcoin and other digital assets.
Some people have compared the current situation to Wall Street firms failing during the 2008 financial crisis, especially in light of the failure of FTX and other ostensibly healthy companies.
With Blockfi now considering filing for bankruptcy, another crypto firm, SALT Blockchain, which specializes in lending, also appeared to be in trouble. The company, Bnk to the Future, has now withdrawn from the purchase of SALT, citing its exposure to FTX.
In tweets, SALT’s CEO said he is ‘fully committed still to recover from the damages as victims.’
Efforts Underway to Save the Crypto Industry
Cryptocurrency exchange Binance recommended the establishment of a rescue fund that would prevent the collapse of otherwise healthy crypto firms, demonstrating the investors’ extreme concern that the cascade consequences could cause long-term damage.
Changpeng Zhao, the founder, and CEO of Binance, convincingly set out the idea of a crypto-like central bank or deposit-insurance pool acting as a lender of last resort to prevent healthy businesses from failing.
Before news broke that the FBI was on the case, crypto Twitter has been calling for a manhunt against the former FTX CEO.
Some users even claimed to have gathered enough evidence to put the thirty-year-old away for a long time.
After a long week of speculation and frustration, FTX users may finally be close to getting some closure. It remains to be seen the extent to which the FTX collapse will hurt the crypto industry and how for how long.
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