Chaos in the cryptocurrency market after the FTX shock
“Again, sorry, let’s go,” FTX founder Sam Bankman-Fried tweeted last night. FTX’s official bankruptcy filing marks the end of one of the largest crypto empires and a farewell to one of the richest and most powerful figures in the industry.
More than 130 affiliated companies in the FTX ecosystem are registered in a bankruptcy filing as well as a lawsuit against Alameda Research, an FTX-linked investment fund, with at least $10 billion in debt. This makes FTX the biggest bankrupt in the US this year.
Bloomberg Owen Lau, analyst at Oppenheimer & Co, quotes: “This is a moment of greatness and shock for the entire industry. There will be plenty of angry investors, anger and pain for regulators around the world. because of this painful decision.”
According to Mike McGlone, senior analyst at BloombergFTX shocks will be much stronger than anyone could have imagined. “Bitcoin is the first victim and it will be a domino effect for the entire industry. I am concerned that bitcoin will fall to the $10-12k mark after this event,” he said. coin telegraph.
Data from Cointelegraph Pro marketplace shows that Bitcoin is also down 20% this week to $15.7K. Besides Bitcoin, a number of projects have fallen sharply, such as Ethereum (-22%), MicroStrategy (-32.57%), Marathon (-4.95%), Riot (-5.74%), Hive (-16, 08%). %). … The decline of cryptocurrencies led to the sale of miners. According to Charles Edwards, founder of the Capriole Fund, bitcoin miners have hit a red level on the Selling Pressures chart, indicating that selling has reached its highest level in five years.
While FTX closed the deal, some found that customers could still withdraw funds in the Bahamas. Immediately, the market made a splash by moving the wallet address to the Bahamas. Someone offered to pay FTX employees $1 million and unlimited legal fees to change their residency information. The AlgodTrading account also says it will pay $100,000 to FTX staff if they support KYC (Identity Verification) to be able to withdraw funds quickly. A number of content removal services have sprung up overnight due to huge user demand, despite the risk of scam alerts.
The list of those affected grows longer by the day. It can be called Multicoin Capital, the main mutual fund in the Solana ecosystem, which locks 10% of all AUM (BTC, ETH and USD) into FTX, which is 9 digits. Sequoia lost $213.5 million. Genesis lost $182 million in trading accounts. The chain protocol (XCN) doesn’t reveal any details, but it also means up to 8 digits. The world’s largest pension fund, Ontario, has announced that it has lost $95 million in the FTX case and its pension plan will be hit hard in the near future.
BlockFi, the world’s largest lending institution under CeFi, has announced a suspension of user payouts. BlockFi was once worth $5 billion in 2021, but it’s now only worth $500 million. In July, BlockFi offered FTX a $680 million deal, a $400 million line of credit, and an option to sell the company back to the stock market for $280 million.
Despite the unexpected volatility in the cryptocurrency market, the FTX collapse was the subject of public shock. Bankman-Fried once had high hopes for a regulated cryptocurrency exchange. Unlike other crypto billionaires, he is willing to speak to US lawmakers and regulators about the future of FTX. He appears in all media, does lobby work and even spends a fortune on the US presidential election. FTX peaked in 2021 and has earned the trust of over 5 million users worldwide trading $700 billion worth of cryptocurrencies.
The crisis hit FTX less than a week after Alameda reported financial troubles. CZ, the CEO of Binance, later announced that he was selling all FTT tokens over fears of a Luna-like crash. The massive sell-off dropped the price of FTT from $22 to several dollars. The loss of liquidity on the FTX exchange led to the collapse of the entire cryptocurrency market. Sam Bankman-Fried’s latest attempt was to sell himself to Binance, but the deal fell through. He even enlisted the help of crypto entrepreneur Justin Sun but was unable to save the sinking ship.
US authorities are also investigating Bankman-Fried and FTX. The savior of the cryptocurrency market, Sam Bankman-Fried, turned from a supposedly magical figure into a criminal, was investigated and sentenced to prison. His net worth, which hit $16 billion earlier this week, has quickly returned to where it was and he is facing a debt spiral. Bankman-Freed’s ending is compared to the worst version of Do Kwon.