Elon Musk has jumped into the meltdown of FTX, the world's second-largest cryptocurrency exchange, after it was revealed FTX's founder wanted to give Musk money to help him buy Twitter.
In the space of a week, the cryptocurrency exchange platform FTX, created by former CEO Sam Bankman-Fried, collapsed after experiencing the cryptocurrency equivalent of a bank run. Here's what happened. It was revealed that FTX held the majority of its cash reserves in its own native token, FTT, which sparked concern that if a large portion of people tried to withdraw their assets, the platform wouldn't have sufficient capital. Competing platform Binance revealed its position in FTT and said it would be selling its position over the coming months to reduce the impact on FTX.
However, Binance CEO Changpeng "CZ" Zhao announced on Sunday night that Binance would be liquidating all of its remaining FTT, dumping more than $500 million worth of FTT onto the open market, causing the overall price of FTT to plummet. The massive reduction in FTT's price caused FTX investors to panic about their holdings in the exchange, which resulted in users rushing to the exchange to withdraw holdings. FTX was forced to pause withdrawals, which only further amplified the panic. FTX has since filed for bankruptcy.
In some leaked emails between Elon Musk and Michael Grimes, FTX's co-founder reached out to Musk through a mutual contact about investing in Twitter and Musk's bid to purchase it. Bankman-Fried said he was interested in integrating blockchain into the platform, which Musk decided to speak on. Bankman-Fried also wanted to invest purely in Musk's bid, which Musk asked, "Does Sam actually have $3B liquid?". The downfall of FTX and Bankman-Fried's mishandling of customer assets has caused Twitter users to go through his history, pulling up old emails such as the one involving Elon Musk.
Musk saw the email chain and responded, "Accurate. He set off my bs detector, which is why I did not think he had $3B." Furthermore, Musk has written on his personal Twitter account that the FTX meltdown/ransack is being tracked in real-time on Twitter.
In response to the collapse of FTX, Binance CEO CZ has pledged the company will be much more transparent with its reserves to its customers. If you are interested in reading more about that story, check out the below link.