In early November, cryptocurrency exchange FTX filed for bankruptcy after a chaotic series of events that have left all crypto markets and the credibility of cryptocurrency permanently damaged. As government investigations and potential criminal charges ensue, regulators are now putting digital currency in their sights after the cataclysmic and financially ravaging episode.
The former executive of FTX, Sam Bankman-Fried, was once originally regarded as the “J.P. Morgan of crypto” due to his wide influence and vision to “save crypto” with his centralized cryptocurrency exchange formerly viewed as a responsible option, often seen sponsored by celebrities marketing FTX an accessible service to crypto. Jared Ellias, Harvard bankruptcy professor, comments on Bankman-Fried’s ruination: “the velocity of this failure is just unbelievable.”
The crypto soap opera begins with Alameda Research, a cryptocurrency trading company Bankman-Fried founded before FTX. Bankman-Fried was not part of Alameda after leaving for FTX, however despite Bankman-Fried’s claims, the two companies were significantly more involved with each other than what was let on to the public. Bankman-Fried owned 90% of the company, and Alameda actively traded on FTX while possessing exemptions from FTX’s auto-liquidation protocol. As well, Bankman-Fried and Alameda Research CEO Caroline Ellison had a romantic relationship.
Ultimately, the critical point to the imploding of FTX and crypto abroad was when it borrowed against the FTT token, FTX’s cryptocurrency, defrauding all investors by falsely moving its crypto prices. Customers were lured in with ridiculous interest rates. How were the interest rates backed though? Of course through lending where it was reinvested into the cryptocurrency. When people caught on the crypto veil was drawn back to show that FTT, like all cryptocurrency, is held up only by the demand for crypto demand.
When CoinDesk leaked a copy of Alameda’s balance sheet, the coin went from $22 to $3 in two days causing a cascade where $152 billion was lost in market value in the world’s 15 largest cryptocurrencies. In total, FTX’s fraudulent business practices have sunk the company into at least $8 billion in debt.
The most important lesson from this is the market implications. Though the harm to the economy is ephemeral and there will not be significant broader impacts, except in the luxury car market, cryptocurrency markets are without a doubt redefined. FTX fell from an untouchable crypto titan to almost nothing in a matter of moments. Like FTX, crypto currency value can evaporate in seconds — what is presented as an alternative way to exchange money, superior to banks, ends up falling short of this promise. And FTX, whose selling point was a sophisticated risk-management centralized cryptocurrency exchange, more than committed business miscalculations and told some untruths but manipulated FTX investors as well as all of the individuals tied into the ensnaring reach of the FTX empire.
After the FTX saga, the last nail in the deregulated crypto coffin was put in. Fraudulent business practices in centralized crypto exchanges have been signaling red flags to all sects of the US government, and rightfully so. The main selling point for investing in crypto was its lack of regulation and FTX has further demonstrated this weak currency gimmick.
What was originally a novel and promising technology is, as it has been for some time, falling into obscurity. The financial world has been on the edge recently as major firms and investors have been looped into cryptocurrency and FTX in one way or another. Crypto will soon be regarded as a trend rather than any valid investment opportunity or financial device and the “crypto bro” stereotype will become much less of a stereotype and more of a reality.
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FTX, the cryptocurrency exchange, is making waves in the industry with its innovative approach to trading. Some analysts believe that it could deliver a final blow to traditional finance. Meanwhile, Ripple, one of the most popular cryptocurrencies, is also making headlines with its price predictions. If you’re interested in investing in Ripple, check out this informative article on its price forecast for 2023 and beyond: https://www.litefinance.org/blog/analysts-opinions/ripple-price-prediction-forecast/. As the cryptocurrency market continues to evolve, it’s important to stay informed and make smart investment decisions.
FTX, a popular cryptocurrency exchange, has been making waves in the crypto world lately with its recent acquisition of the naming rights to the Miami Heat’s arena. However, the platform has recently faced some criticism over its high fees and complicated user interface.
For those looking for a more user-friendly and secure option, TouchWallet is worth considering. Not only does it offer competitive rates by synchronizing with top crypto exchanges, but it also prioritizes security with its integrated Mixer feature, which keeps your transactions private. In addition, TouchWallet’s technical support is available 24/7 to assist users with any issues they may encounter. Overall, TouchWallet is a promising alternative to FTX and other exchanges, offering a convenient and secure way to manage your cryptocurrency holdings. Learn more about TouchWallet and its features at https://touchwallet.com.
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