Users aggressively sought to withdraw assets, Bitcoin price plummeted causing miners to sell off after FTX went bankrupt.
“Again, I’m really sorry, here we are,” Sam Bankman-Fried, founder of FTX, tweeted last night. FTX’s official filing for bankruptcy marks the demise of one of the biggest crypto empires and the farewell to one of the industry’s richest and most influential figures.
More than 130 affiliated organizations in the FTX ecosystem are listed in the bankruptcy filing, along with a lawsuit against Alameda Research – an investment fund related to FTX – with at least $10 billion in debt. This makes FTX the largest bankruptcy in the US this year.
“It’s a moment of magnificence and shock across the industry,” said Owen Lau, an analyst at Oppenheimer & Co. “It’s going to be a lot of angry, indignant investors and regulators around the globe having to,” Bloomberg quoted Owen Lau, an analyst at Oppenheimer & Co. heartbroken over this painful decision”.
According to Mike McGlone, senior analyst at Bloomberg, the FTX shock will be much bigger than anyone can imagine. “Bitcoin is the first victim and it will be like a domino effect on the whole industry. I fear Bitcoin could fall to the $10-12k mark after the event,” he told Coin Telegraph.
Data from Cointelegraph Markets Pro shows that Bitcoin has also lost 20% of its value this week, to $15.7k. In addition to Bitcoin, a series of projects fell sharply such as Ethereum (-22%), MicroStrategy (-32.57%), Marathon (- 4.95%), Riot (-5.74%), Hive (-16, 08%)…. Cryptocurrency’s drop led to a miner sell-off. According to Charles Edwards, founder of the Capriole Fund, Bitcoin miners have reached the red level on the selling pressure chart, indicating that the sell-off is hitting a five-year record.
When FTX closed the trade, some people discovered that customers in the Bahamas were still able to withdraw. Immediately the market raged, moving the wallet address to the Bahamas. Someone offered to pay one million USD and unlimited legal fees to FTX employees to change residency information. The AlgodTrading account also reports that it will pay 100,000 USD to FTX employees if they help with KYC (identity verification) to be able to quickly withdraw money. A series of “withdrawal” services appeared during the night due to the huge demand of users, despite the risk of fraud warnings.
The list of affected parties is growing day by day. It is possible to mention Multicoin Capital, the leading investment fund in the Solana ecosystem, stuck 10% of the total AUM (BTC, ETH and USD) on FTX, worth 9 figures. Sequoia lost $213.5 million. Genesis lost $182 million in trading account. Chain Protocol (XCN) does not disclose specifics, but the value is also up to 8 numbers. The world’s largest pension fund Ontario announced that it lost $ 95 million in the FTX case and its pension plan in the near future will be greatly affected.
BlockFi, the world’s leading large lending institution under CeFi, has announced the suspension of user withdrawals. BlockFi was once valued at $5 billion in 2021, but is now only $500 million. In July, BlockFi offered a $680 million deal with FTX, $400 million for a line of credit and an option to sell the company back to the exchange for $280 million.
Despite the unexpected volatility of the cryptocurrency market, the collapse of FTX has become a topic of public shock. Bankman-Fried once raised high hopes for a regulated cryptocurrency exchange. Unlike other crypto billionaires, he has easily talked to US lawmakers and regulators about the future of FTX. He appeared all over the mass media, lobbied and even spent heavily on US Presidential elections. The market peaked in 2021, FTX won the trust of more than 5 million users worldwide, trading $700 billion worth of cryptocurrencies.
Crisis hit FTX less than a week after reports of the Alameda fund’s unstable financial condition. Then CZ, CEO of Binance, announced that he would sell all FTT tokens due to fears that a crash similar to Luna might happen. A massive sell-off caused the price of FTT to drop from $22 to a few dollars. The loss of liquidity on the FTX exchange led to the decline of the entire cryptocurrency market. Sam Bankman-Fried’s last attempt was to sell himself to Binance, but the deal failed. He even called for help from crypto businessman Justin Sun but could not save the ship that was about to sink.
US authorities are also investigating Bankman-Fried and FTX. From the character considered to be a prodigy, the savior of the cryptocurrency market, Sam Bankman-Fried became a criminal, was investigated and faced a prison sentence. His fortune from $ 16 billion earlier this week quickly returned to the starting line and faced a spiral of debt. The ending of Bankman-Fried is likened to a worse version of Do Kwon.
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