FTX crisis deepens

The implosion of Sam Bankman-Fried’s FTX empire entered a new phase Friday morning.

The reeling crypto exchange filed for bankruptcy. SBF has exited as CEO. 

Bitcoin within minutes fell about 7% to about $16,300.

Only yesterday, BTC, aided by an unexpected tailwind – U.S. inflation numbers coming in cool – set sail toward green seas above $17,000. That held as of very early this morning prior to the bankruptcy news breaking.

However, when we checked about 10:30 a.m. (EST), BTC had very quickly turned to red. But then, oddly enough, the largest crypto bounced back near $17,000 as of 10:55 a.m. (EST).

It was only Monday that FTX founder Sam Bankman-Fried tweeted "assets are fine." Since then, his crypto empire has unraveled faster than some of the layer-1 scaling projects it has backed, with SBF admitting that there was a problem – an $8 billion balance sheet hole – and asking for help, but so far not getting it.

At least one VC firm has literally written FTX off.

Yesterday, the reeling exchange opened a sliver of a window for some limited withdrawals, prompting customers to yank millions, Decrypt reported, noting that the "brief moment of hope gave the markets a reprieve after a bloodbath week."

FTX’s profoundly humbled founder posted a long-winded, fall-on-his-sword apology on Twitter on Thursday, saying he would wind down Alameda Research.

The FTX native asset, FTT, had surged 20% or so in the past 24 hours to above $3 as of earlier this morning.

At dawn's early light, day five of the fall of FTX, several wire services and websites ran with a tweet from a Bloomberg reporter claiming Tron founder Justin Sun was prepared to provide the solvency challenged exchange/trading firm with billions in aid.

A perfect moment in time for a display of crypto unity is one way to frame this quickly unfolding situation, or so Sun seems to think. Here's a snapshot of what the moment looks like as of early Friday morning: FTX files for bankruptcy; Bahamian regulators froze some FTX assets; industry peers scrambled to assess/mitigate exposure to FTX woes; FTX employees are said to be trying to sell assets; Bankman-Fried is under intensifying scrutiny from a growing cadre of authorities; and, as Cointelegraph noted, the "crypto community continues to be bombarded with rumors and conspiracy."

Meanwhile, Blockworks reports BlockFi has been swept up in the ongoing crisis, suspending withdrawals only two days after assuring users that it was fully operational.

In July, BlockFi was given access to a $400 million credit facility as it sought to avoid the fate of some rival lenders entering bankruptcy. That lifeline came from FTX. But it's still unclear how much, if any of it, BlockFi tapped.