Last Updated on November 23, 2022 by Bitfinsider

How did FTX come about?

Back in 2017, Sam Bankman-Fried (SBF), an ex-Jane Street Capital quant trader noticed something odd when he viewed the website on CoinMarketCap.com that listed the price of bitcoin on exchanges throughout the world. Today, this price is quite uniform among exchanges, but in the past, Sam Bankman-Fried observed a 60% variance in the value of the currency. According to him, his initial inclination was to engage in arbitrage trading by purchasing bitcoin on one exchange, selling it back on another exchange, and generating a profit equal to the price spread.

In South Korea, where the exchange-listed price of bitcoin was substantially higher than in other nations, the arbitrage potential was particularly enticing. It was given the term Kimchi Premium, a reference to the traditional Korean side dish of fermented cabbage.

After a month of dabbling in the market individually, Sam Bankman-Fried established his own trading firm, Alameda Research — called after his hometown of Alameda, California, outside San Francisco — to scale the potential and work on it full-time. In a September interview, Bankman-Fried stated that the company occasionally earned as much as a million dollars each day.

Part of the reason SBF, as he is also known, got street cred for executing a relatively easy trading technique five years ago was because it wasn’t the easiest thing to do on crypto rails at the time. Bitcoin arbitrage required establishing connections to each trading platform and developing other complex infrastructure to abstract away a significant portion of the operational aspects of making the trade. That became Alameda’s forte and the cash poured in.

The success of Alameda prompted the launch of the FTX cryptocurrency exchange in the spring of 2019. The success of FTX spawned a $2 billion venture fund that backed other cryptocurrency companies. In March, Bankman-personal Fried’s fortune peaked at nearly $16 billion.

What happened to FTX?

According to sources, Alameda began borrowing money for various purposes, including venture capital investments, sometime during the last two years.

Six months ago, a wave of crypto industry heavyweights failed as low token values drained the market of liquidity. First, a prominent U.S. dollar-pegged stablecoin project, known as terraUSD or UST, and its sister token luna, failed spectacularly, wiping out $60 billion. This fall contributed to the demise of Three Arrows Capital, or 3AC, one of the industry’s most prestigious crypto hedge funds. Cryptocurrency brokers and lenders such as Voyager Digital and Celsius have substantial exposure to 3AC, and consequently, they crashed in rapid succession.

The major issue was that everyone was borrowing from one another, which only works if the price of all crypto currency continues to rise. By June, both bitcoin and ether had dropped by more than fifty percent for the year.

As the dominoes fell, Sam Bankman-Fried stepped in in June to provide hundreds of millions of dollars in financing in an attempt to save some of the faltering crypto businesses before it was too late. In several instances, he attempted to acquire these businesses at fire-sale prices.

As crypto prices plummeted, Sam Bankman-Fried boasted that he and his business were immune. Truth to be told, the sector-wide devastation had a significant impact on his enterprise. Alameda reportedly skimmed out FTX customers’ deposits to avoid margin calls and satisfy immediate debt obligations in order to keep the digital asset business afloat through spring and summer. A Twitter confrontation with the CEO of rival exchange Binance revealed the scheme and the rest of it was fully exposed.

ProEX Special Grant Fund

ProEX is the world’s leading multi-contract trading platform, provides bitcoin and various cryptocurrencies, perpetual contract trading, ETF and other digital asset trading functions, Staking Pool services.

Since its debut, ProEX has been committed to creating a better trading environment for their clients and users. Therefore, the special grant fund is available for all users and partners who have been affected by this FTX incident (including media partners, affiliates partners, KOLs, etc). 

In fact, the grant is also extended to new users who have not registered and used their exchange in the past. Thus, if you are also a victim of this incident, you are welcome to join and receive ProEX special grant!

Please provide the information via the following form.

Grant Information:

Grant Rules:

1. This plan reward will be settled and will be airdropped to eligible users’ ProEX accounts within 14 working days after the plan ends.
2. You need to pass the KYC of both platforms, as FTX has been suspended, you need to screen record the KYC approval E-mail and the withdrawal failed to notice in the email.
3. Videos must be recorded to specifications, and if ProEX has any violations, after verification, you will not be eligible for rewards. We reserve the right to interpret, modify, suspend, terminate the mode of operation, and change the content of the version at any time.
4. If KOL(s) meets the highest conditions (20,000U FTX / 15,000U ProEX), an additional 50 USDT contract fund will be awarded
5. The fund limit is 2 million USDT and the grant will be on a first come first serve basis. Users who provide information first will be set as a priority, and ProEX will airdrop according to the time specification.
6. The contract fund can be used for the contract function of the ProEX platform and can be withdrawn through the normal procedure after trading.
7. The contract fund is valid for 14 days after you receive it.
8. No reward will be awarded for account swiping or for any violation. Once we confirm the prohibited case, the account and identity will be permanently suspended, and the official will retain the power to prosecute before the law.
9. For users participating in this activity, the data, and records of any participation activities maintained or created by them are primarily based on the time displayed by the ProEX system.
10. ProEX reserves the right to interpret, modify, suspend, terminate the method of operation and change the version content at any time.

Event duration: (UTC+8) 11/15 18:00 ~ 12/15 23:59