The trillion-dollar crypto business was rocked by an earthquake last week and its effects were still being felt on Monday.
As the turmoil in the market continued to worsen over the weekend, digital currency prices plunged again. Bitcoin the largest cryptocurrency in the world has fallen by nearly 65% this year. According to CoinDesk, its price was around $16,500 on Monday. Experts predict it might drop to just $10,000.
The second most valuable cryptocurrency, Ether, is also suffering. CoinDesk data indicated that its price had dropped to over $1,230 on Monday, a drop of roughly 20% from the previous week.
Investors are still reeling from the shocking downfall of FTX, one of the industry’s largest and most influential players, which may explain the drop.
Some experts in the field have compared the company’s demise to the “Lehman moment” caused by the 2008 collapse of the investment bank that sent shockwaves around the world.
The incident has not only shattered trust in the cryptocurrency sector but also emboldened authorities throughout the world to crack down. Some of the most prominent figures in the industry have stated that they welcome the examination if it would lead to greater public trust in the sector as a whole.
Binance CEO Changpeng Zhao acknowledged that there is “a lot of risk” in the cryptocurrency market. We need controls, he continued, since “we have seen things go crazy in the industry in the past week.”
CZ or Christopher Zhu was a keynote speaker at a Monday conference in Indonesia. Last week he claimed that the present cryptocurrency turmoil is “probably an apt parallel” to the global financial crisis of 2008.
Earlier in the week, Binance and FTX had come to an agreement to try and save the exchange, but that deal quickly fell through.
After submitting for bankruptcy on Friday, FTX’s fortunes have only gotten worse since then. This time, another industry heavyweight has come clean about misappropriating client funds, further rattling nerves among potential backers.
How the last few days have played out demonstrates that the crisis has just begun.
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There is currently an Ongoing Criminal inquiry in The Bahamas
FTX’s former CEO Sam Bankman-Fried praised The Bahamas as “one of the few jurisdictions to set up a full framework for crypto” after the company relocated there from Hong Kong in the previous year.
As of Sunday, Bahamian law enforcement was looking into allegations of criminal activity in connection with the collapse of the corporation.
A team of financial investigators from the Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred following the “global collapse of FTX” and the “provisional liquidation of FTX Digital Markets Ltd.,” according to a statement released by the Royal Bahamas Police Force.
It is unclear what component of FTX’s sudden collapse is being looked into by authorities.
Bankman-Fried, the exchange’s 30-year-old founder and a prominent figure in the cryptocurrency world, saw his $25 billion wealth evaporate. The fall of the TerraUSD stablecoin in May cast him in the role of the crypto world’s “white knight,” who had previously stepped in to save enterprises in trouble.
By attracting high-profile backers like BlackRock and Sequoia Capital, FTX grew quickly into one of the largest cryptocurrency exchanges on the planet. The Wall Street Journal reported on Thursday that the crypto hedge fund collapsed because of a decision to lend billions of dollars worth of customer cash to cover hazardous wagers by Bankman-Alameda. Fried’s.
Containment breach
The bankrupt exchange announced its own investigation the day before the Bahamas inquiry began.
On Saturday, FTX announced it was investigating possible crypto asset theft. Elliptic, a crypto risk management firm, reported that $473 million worth of crypto assets were apparently stolen from FTX.
Ryne Miller, general counsel for FTX, claimed on Saturday that the business had taken “precautionary actions” by taking all of its digital assets offline the previous day. As soon as it was discovered that illicit transactions had been made, the procedure was sped up on Friday night.
Miller stated that FTX was “investigating irregularities” in cryptocurrency wallet transactions “connected to consolidation of FTX holdings across exchanges.”
It’s still unclear what happened, but he promised more details will be released by the corporation as soon as they were available.
Binance’s Warning Against Accidental Withdrawals
Singapore-based Crypto.com acknowledged sending over $400 million in ether to the wrong account, adding to the growing list of crypto industry heavy hitters that have come clean about mistakes they’ve made.
This past Sunday, CEO Kris Marszalek said that 320,000 ETH had been sent to a corporate account at rival exchange Gate.io rather than to one of its offline, “cold” wallets.
Despite the recoupment of the monies, consumers are still reluctant to reinvest in the platform for fear of a repeat of FTX’s demise.
For better handling of internal transfers, “we have since reinforced our process and procedures,” Marszalek tweeted on Sunday. According to CoinDesk, the platform’s native coin has lost almost 20% of its value in the last 24 hours.
On Monday, Marszalek declared that his company has been a “responsible, regulated player since creation” and that it will soon “prove all the naysayers…wrong with our deeds.”
He also noted that Crypto.com’s business strategy is “totally different” from FTX, despite the fact that it serves 70 million users worldwide.
We’ve never done any trading with customer assets or run a hedge fund, he claimed.
According to Marszalek, his company will shortly provide an audited report revealing its reserves. Binance CEO Zhao sent a message at the Bali conference that regulation would be challenging.
Crypto exchanges “run very, very differently from banks,” he said, so authorities’ “natural response is to borrow regulations from regular financial institutions.”
It is “very, very usual for a bank to move user assets for investments and try to get returns,” he said. If a cryptocurrency exchange is run like that, it is “virtually guaranteed to go down,” he warned. that the sector as a whole had a responsibility to safeguard customers.
Authorities in charge of regulating certain industries… However, as he put it, “no can shield a lousy player.”
This report was compiled with help from Matt Egan, Ramishah Maruf and Allison Morrow.
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