• Home
  • Exchanges
  • The FTX loss erodes faith in the crypto community

1xbit

The FTX loss erodes faith in the crypto community

Since Tuesday, cryptocurrencies and the exchange’s internal token, FTT, have gone down because FTX’s financial problems.
| Cryptopress
Updated: November 9, 2022

CryptoPress

On Tuesday, the cryptocurrency market went down because there were rumors that cryptocurrency exchange FTX might go bankrupt and questions about the health of its sister company, Alameda Research.

When Binance founder Changpeng Zhao announced over the weekend that the business would liquidate its $FTT holdings, investor confidence was rattled.

Multiple on-chain data sources show that clients of FTX, the third largest crypto exchange by volume, can only withdraw a small amount or nothing at all.

FTT, the token on Sam Bankman-FTX Fried’s exchange, has fallen more than 70% overnight as fears about the billionaire’s trading business, Alameda Research, have taken control of the market.

The biggest exchange in the world, Binance, is putting pressure on FTX after its CEO, Changpeng “CZ” Zhao, said that Binance will slowly sell off its billions of FTT tokens.

“FTX is connected to the Alameda hedge fund through a large number of FTT tokens,” said Ark’s chief investment officer, Jeff Dorman. “If they are using all of these FTT tokens as collateral, there are two problems,” he added.

LOI

Binance has signed a letter of intent to purchase FTX. Given that the two major cryptocurrency exchanges in the world have been arguing in public, this is an unexpected turn of events.

Zhao wrote on Twitter that Binance has about $2.1 billion worth of FTT and BUSD, which are fiat-backed stablecoins that Binance and Paxos made together.

The CEO of Alameda, Caroline Ellison, responded to Zhao on Twitter by offering to buy Binance’s FTT holdings for $22 per token.

Last week, cryptocurrency fans raised questions on Twitter about the FTX token after the news site CoinDesk said that a balance sheet from Alameda Research, a trading company created by Bankman-Fried that has close ties to FTX, had been leaked.

The analytics company Nansen said that there was a net outflow of about $630 million from FTX in just one day. This means that people are taking money out of their accounts.

Some reports say that FTX has added USDC liquidity from Alameda Research accounts and that its stablecoin pool has dropped by 93% in the last two weeks.

A target for other firms

“Regulators will intensify their scrutiny of exchanges.” “It will be more difficult to get licenses throughout the world,” Zhao wrote to workers on Wednesday morning.

“Never use a token that you have produced as collateral. Don’t borrow if you own a cryptocurrency company. Utilize capital inefficiently. Have a substantial stockpile,” Zhao tweeted.

The CEO of Binance stated that a purchase of FTX, which would create the world’s biggest cryptocurrency exchange, would make the firm a target for all the other firms.

Not a “win for us”

In a statement released on Twitter, CZ asked not to understand the situation as a victory for Binance, nor as a master plan to keep the company, as it sees FTX’s illiquidity as bad for the entire industry.

© 2022 Cryptopress. For informational purposes only, not offered as advice of any kind.

Related


More Articles

BlockFi’s U.S. bankruptcy filing

Two weeks ago, BlockFi banned withdrawals owing to “lack of clarification over the fate of FTX.com, FTX US, and Alameda.” As previously mention…

Genesis Block to Halt Operations Amid Potential FTX Repercussions

The FTX’s contagious impact continues to spread across the cryptocurrency sector. Genesis Block, once Asia’s biggest Bitcoin ATM provider, is one …

Crypto Contagion: Bank of America downgrades Coinbase to Neutral, COIN down 7%

Bank of America (BofA) has downgraded the shares of Coinbase, a cryptocurrency exchange platform, after the collapse of the FTX cryptocurrency exc…
(Visited 9 times, 1 visits today)
© Cryptopress. All rights reserved.