This week in coins: FTX breaks, Bitcoin falls to two-year low

This week with coins. Illustration by Mitchell Preffer for Decryption.

Welcome to our weekly summary of cryptocurrency market action over the past seven days.

Just when the industry started thinking about Crypto Winter had passedthis week, the sudden cinematic collapse of cryptocurrency exchange FTX caused prices to fall across the board.

According to data from CoinGecko, bitcoin (BTC) and Ethereum (ETH) collapsed in sync, both losing nearly 20% of their value in the past seven days.

Bitcoin (BTC), the world’s top cryptocurrency, is currently trading at $16,872, a price not seen since the November 2020 pandemic-fighting bull run.

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is trading at around $1,274 today — the last low seen in early July.

Among the top fifty cryptocurrencies, the sharpest loss was felt by owners of Solana (SOL), which saw its gains drop 47% over the past seven days. SOL changes hands at $16.26.

FTX CEO was Sam Bankman-Fried One of Solana’s first supporters and also owned a large stock of SOL through another crypto company, Alameda Research. SOL was the disgraced hedge fund’s second largest coin holding.

Broadly speaking, double-digit percentage losses were quite common this week. XRP and privacy coin Monero (XMR) posted similar losses for both market leaders, with XRP starting at 38 cents over the weekend and Monero trading at $127.

Holders of Dogecoin (DOGE), down 31% to $0.084633, also felt sharp losses; Avalanche (AVAX) fell 23% to $13.96, while Algorand (ALGO) fell 18% to 13 cents.

FTX general collapse

No one saw this coming – but they probably should have.

At the beginning of the summer, when the collapse of Terra caused a wave of bankruptcies, Sam Bankman-Fried was the first industrial billionaire to open his wallet to open his wallet. left, right and center.

On paper, at the time, it looked like he could afford it.

Bankman-Fried, at the height of his fortunes in March, was worth a tear 26 billion dollars. In October last year Forbes called him”The richest man in the world is 29 years old” and “the richest self-made newcomer in Forbes 400 history”. Luck its cover asked if he was “the next Warren Buffett.”

The image was cracked this week. This began after Binance CEO Changpeng Zhao announced that he would be moving to liquidate the exchange. all FTT holdings—FTT is the native token of FTX—refers.recent statements” FTX was allegedly lobbying “behind other industry players”.

Zhao’s tweet FTX caused a bank run as its customers began withdrawing funds en masse from the exchange. Excellent 6 billion dollars He was discharged from FTX within 72 hours. To put that into perspective, the exchange typically handled “tens of millions” of withdrawals on an average day. In a familiar pattern, withdrawals were “effectively halted” due to the exchange’s liquidity problems. The source who spoke about it said Reutersthe freezing decision was made at the top.

The FTT token was deleted during the week. It was worth about $25 on Sunday. Today it is almost trading one tenth of the price.

Things took an interesting turn on Tuesday when Binance entered non-binding contract to settle FTX for an undisclosed sum. Zhao situation”high dynamic,” making clear that its exchange “reserves the right to withdraw from the deal at any time.” And it did just that tomorrow. Zhao said the FTX was “beyond our ability to help.”

It turns out that the potential resurgence of Zhao and Bankman-Fried’s cryptocurrencies came from due diligence. In a tweet statementBinance linked its turn with “the latest news about mismanagement of client funds and It is claimed that the US agency is investigating” and “matters beyond our control or ability to assist,” he said.

During the week, several crypto companies denied any association with the blocked FTX, including Coinbase, Circle, Tether and Maple Finance. However, as with Terra, the contagion will continue to spread.

On Wednesday, cryptocurrency-focused financial services firm Galaxy Digital announced that it is one $76.8 million Exposure to FTX. The next day, cryptocurrency investment and trading group CoinShares said this 30.3 million dollars in cryptocurrency locked in FTX that he has not been able to redeem until now.

The final act of the FTX drama came Thursday when the Securities and Exchange Commission of the Bahamas, where the FTX is headquartered, ordered To freeze the assets of FTX. The Bahamian regulator suspended the exchange’s operational registration and asked the High Court to appoint a provisional liquidator.

The crisis culminated Friday with news that FTX filed for Chapter 11 bankruptcy. Alameda Research, along with the stock’s American subsidiary FTX.US and approximately 130 affiliates will also file for bankruptcy.

Bankman-Fried has now stepped down as executive director and will be filled by veteran bankruptcy attorney John J. Ray III. Ray previously steered Enron through bankruptcy proceedings—an apt parallel.

This week, the industry has seen one of the fastest wealth contractions in history. The true extent of the damage will become clearer in the coming months.

The disgraced former FTX CEO tweeted on Friday: “Me I’m really sorry, again.”

Stay up to date with cryptocurrency news, get daily updates in your inbox.

Source link