Blockchain ecosystem: How is it going to help the FTX or other digital asset families? Comment on the Lehman moment of September 8, 2016
The downfall of the FTX exchange, one of the biggest and most credible in the market for digital assets, is sparking alarm among people who own cryptocurrencies.
The downfall of the company triggered a Lehman moment like the fall of the investment bank in 2008 that sent shock waves around the world.
“This was one of the most trusted entities in the crypto space, so it will take some time to recover,” said Jay Jog, co-founder of the blockchain startup Sei Labs, which is based in California.
The company had raised $32 billion in its most recent funding round and had attracted high-profile backers including SoftBank, Tiger Global and celebrities like Tom Brady and Gisele Bndchen. Its name is on the arena where the Miami Heat play.
The situation is evolving quickly. One worry is how it would affect the entire sector, which was worth $1 trillion in August.
Bankman-Fried put up $1 billion to keep the entire industry afloat in the summer of 2016 when digital assets plummeted in value. Now, few white knights are left to rescue FTX and others in distress.
“The number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem,” strategists at JPMorgan said in a note to clients this week.
Traditional investors have also been burned, though they’re reassuring clients they can handle the fallout. The Ontario Teachers’ Pension plan said that even though it is uncertain, there will be a limited impact on its investment due to its small stake.
What the Bitcoin Crisis is telling us about the crypto-currency market: Why we shouldn’t have a cryptomonopoly at the end of the crypto winter
Changpeng Zhao, the CEO of Binance, tweeted that he had been texting with Nayib Bukele, the president of El Salvador, which has gone all in on bitcoin. We don’t have any vouchers for FTX and we don’t have any dealings with them. I am thankful to God!
Digital currencies fell again on the weekend as the crisis in the market got worse. Bitcoin, the world’s biggest cryptocurrency, has plummeted about 65% so far this year. It was trading at about $16,500 on Monday, according to CoinDesk. Analysts believe that it could fall below $10,000.
In that climate, the “crypto winter” is poised to get even worse, especially as fears about the broader economic backdrop continue to erode the appetite for risky assets.
In the short term, this is going to be bad for the industry. But he doesn’t think it will “end things” entirely, and is hopeful that it could bolster interest in his business, which focuses on building more transparent, decentralized crypto exchanges.
“It reinforces the view that any sort of financial enterprise needs extensive regulation,” said James Malcolm, head of foreign exchange strategy and crypto research at UBS. “Probably by 2024, the whole world will look much more coherent and watertight.”
“We’ve been set back a few years,” he said. The industry is going to be scrutinized a lot more harshly by regulators, it’s probably a good thing.
The Global Cryptocurrency Crisis and its Implications for the Ruling of the Second Most Valuable Coin in The Bahamas, Sam Bankman-Fried
The world’s second most valuable digital coin isn’t faring much better. It is trading at around $1,200 on Monday, having fallen over 20% in the last week.
The industry has grown quickly and as a result, has shown its commitment to security and compliance through large investments in our team and technology.
CZ, as he’s known, was speaking at a conference in Indonesia on Monday. He said last week that comparing the current crypto turmoil to the 2008 global financial crisis is “probably an accurate analogy.”
FTX moved its headquarters from Hong Kong to The Bahamas last year, with former CEO Sam Bankman-Fried hailing it as “one of the few places to set up a comprehensive framework for crypto” at the time.
The Royal Bahamas Police Force said in a statement that they were working closely with the Bahamas Securities Commission to investigate if any criminal misdeeds happened after the collapse of FTX.
Bankman-Fried was the celebrity who became a pariah overnight after his company filed for bankruptcy, leaving at least a million people unable to access their funds.
FTX said on Saturday that it was looking into the possibility of missing assets. Crypto risk management firm Elliptic said $473 million in crypto assets appear to have been nabbed from FTX.
Ryne Miller, General Counsel of FTX, said the company moved all their digital assets offline on Friday. The process was expedited Friday evening “to mitigate damage upon observing unauthorized transactions.”
The Bank of Crypto.io, a World Wide Crypto Exchange, Acceded to $320 M$ ETC, and Its Outflows
As scrutiny of big players in the crypto world increases, Singapore-based Crypto.com admitted to accidentally sending more than $400 million in ether to the wrong account.
Kris Marszalek, CEO of the exchange, told the crowd on Sunday that the transfer of 320,000 ETH was made three weeks ago to a corporate account at Gate.io rather than an offline wallet.
Marszalek said Sunday that the process and systems have been strengthened. The native token fell over 20% in the past 24 hours.
Marszalek said his firm has acted as a responsible, regulated player since its inception and will soon prove all the doubters wrong.
He said it is normal for a bank to try and make money with their user assets. If a crypto exchange operates that way it is “almost guaranteed to go down,” he said. The industry had a responsibility to play in protecting consumers.
On Tuesday, investors withdrew as much as $3billion from the world’s largest cryptocurrencies exchange, as they got nervous about the future of the industry.
It was also featured in the headlines. According to the news agency, US prosecutors were considering filing criminal charges against executives of the popular messaging service in an effort to wrap up a money laundering investigation.
In his post, he said that it was a good idea for each exchange to face stress test withdrawals. He said that Tuesday’s outflows were not one of the highest the company had processed.
FTX, IBM, and Alameda: Cooperation in a New U.S. Sensitive Investigation into The Frauds on Sam Bankman-Fried
Bankman-Fried was indicted in the United States on eight criminal charges. The US markets regulators charged Bankman- Fried with lying to investors and customers.
A writer and investigative journalist called CASEY MAIER, is covering dark money networks across the globe. He is a writer who is currently working on a book investigating foreign lobbying in Washington, DC. His own opinions are expressed in this article. CNN has more opinion.
In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always pair a lack of regulation and oversight with promises of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns out of thin air.
There have been many times when new financial tools, such as railroad bonds, stock purchases and mortgage derivatives, have come to market without proper oversight. Money is always looking to take advantage of the new industries and financial tools. Some have taken advantage of the new investors and taken as much of the wealth as they could.
Two more associates of Sam Bankman-Fried, the founder of the collapsed crypto exchange FTX, have turned on him. Caroline Ellison, who ran FTX’s trading affiliate, and Gary Wang, an FTX founder, pleaded guilty to fraud and are cooperating in the federal criminal case against Bankman-Fried.
Ms. Ellison and Mr. Wang went against Mr. Bankman-Fried. While Mr. Bankman-Fried has said repeatedly — including at the DealBook Summit last month — that he wasn’t aware of what was happening at Alameda, the exchange’s trading affiliate, documents filed yesterday by the authorities claim otherwise.
The SEC declined to comment, but Paxos, which is based in New York and Singapore, confirmed today that the agency alleges BUSD should have been registered as a security in the US, which requires compliance with complex rules. In a statement, the firm said it “categorically disagrees” that BUSD is a security but has complied with an order from the New York Department of Financial Services to halt the creation of any new BUSD, effectively strangling the coin.
Stable Coins: Stable Tokens, Anchored Coins, and a Classically Secure Binding Platform for the Digital Currency Economy
Stable coins are designed to cling to a specific value and are a crucial pillar of the digital currency economy. Most are backed by a combination of cash and bonds, which anchors the tokens in circulation to the desired value.