It’s a financial debacle that hasn’t yet revealed all its victims, and just as importantly, all its secrets.
The overnight collapse of the cryptocurrency exchange FTX was a shock and unpredictable even for Cassandra in the cryptocurrency industry. In February, the company was valued at $32 billion. This summer, FTX was a savior for cash-strapped crypto companies that were victims of the collapse of sister cryptocurrencies Luna and UST, or TerraUSD.
Analysts have already made comparisons to previous financial crises. FTX founder Sam Bankman-Fried has been called the “Bernie Madoff of crypto” after the legendary scammer who perfected the Ponzi scheme.
But is FTX closer to energy broker Enron, or investment bank Lehman Brothers.
“Crypto’s Lehman Brothers Moment”
Analyzing FTX’s role and status, and most importantly its founder and former CEO, makes the company look more like Lehman Brothers than Enron in the cryptocurrency sector.
The collapse of Bankman-Fried’s empire threatens the entire cryptocurrency industry. Similar to Lehman Brothers, whose collapse threatens to collapse the global financial system, the collapse of FTX and its sister companies risks destabilizing the crypto world.
“FTX is the Lehman Brothers Moment of cryptocurrency,” said Nick Saponaro, CEO of the cryptocurrency firm. divi project“It’s actually worse. In 2008, investors would have had some protection. FTX investors wouldn’t, and if history tells us anything, they’re going to lose it all.” The industry has made it very difficult for DeFi providers to operate without third-party oversight, the exact opposite of why crypto was created.”
DeFi is decentralized finance and is meant to disrupt the traditional financial services sector.
Bankman-Fried’s empire looks like an octopus with tentacles extending to all sides of the industry. It’s important to note that Bankman-Fried was definitely targeting both individual and institutional investors.
Bankman-Fried has four companies at the top of its holdings. The first, his FTX, is a platform where you can buy and sell cryptocurrencies. This platform is intended for non-US investors. There is also FTX US, an FTX-like platform for US investors.
From coins to NFTs
Then there’s Alameda Research, which does all the typical stuff. Hedge fund It is also a cryptocurrency trading platform for large investors.
The final arm is FTX Ventures, Bankman-Fried’s personal venture capital firm.
These four companies were very active in the crypto space. Between them there have been investments in over 250 companies and projects in this sector. Their investments were aimed at all segments of the cryptocurrency industry.substitutable Tokens (NFTs), trading, loans, games, etc.
They became very active last summer when many crypto businesses were facing a credit crisis due to exposure to sister cryptocurrencies Luna and UST, or TerraUSD, which crashed on May 9 and lost at least $55 billion. I was.
Alameda, FTX, FTX US, and FTX Ventures then emerged as saviors and bailed out many companies. For example, FTX Ventures acquired his 30% stake in Skybridge Capital on September 8th. Skybridge Capital is an alternative investment firm founded by Anthony Scaramucci, former short-lived director of communications in the White House under President Donald Trump.
Alameda has invested in at least 36 major players in the cryptocurrency industry, including decentralized finance (DeFi) projects like Solana, which offers smart contracts, a pillar of the future of finance.
FTX acquired the assets of crypto lender Voyager Digital, which went bankrupt in September, while FTX US bails out lender BlockFi and has an option to buy the company.
Boring Monkey + CryptoPunks
FTX Ventures is an investor in Yuga Labs, the company behind the Bored Apes Yacht Club (BAYC), which represents Bored Apes, a renowned collection of non-fungible tokens (NFTs). Yuga Labs is also the owner of the CryptoPunks NFT collection. Bored Apes and CryptoPunks are his two most expensive NFT collections in the world.
“Yuga has never used FTX/has nothing/has never done it. There’s no money stuck anywhere. Please don’t let it affect our operations,” said Yuga Labs co-founder. One Greg Solano wrote in a Discord chat message leaked to Twitter:
BlockFi has already stopped withdrawing cash from customers and is considering filing for bankruptcy. SOL, a cryptocurrency issued by the Solana ecosystem, plunged 65% in 14 days.
Genesis Trading has stopped customers from making withdrawals or issuing new loans following the FTX collapse.
Genesis’ setback will affect its partnering Gemini cryptocurrency exchange.
prominent investor
FTX also has prominent investors who suffer losses. BlackRock, Binance, LightSpeed Venture Partners, Ontario Teachers Pension Plan, Ribt Capital, Sea Capital, Sequoia Capital, Temasek, Tiger Global, Softbank.
Sequoia Capital said on Nov. 9 that it had valued its $210 million investment in FTX at $0, deeming it an outright loss.
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