- Ariel Seidman, chief executive officer and and cofounder of blockchain mapping service Hivemapper, remains optimistic about crypto’s future in an interview with Forkast:
- “The crypto industry, ultimately, will be fine. I remember — I was pretty young — but I still remember the dot-com era when all the dot-com companies basically blew up the entire global economy. The dot-com and the internet was just fine after that. Right? So a lot of companies died. A lot of people lost their jobs, unfortunately. But ultimately, you know, the internet came back. It just continued to thrive.
- “And so if you look at what’s interesting and what’s important about crypto, it’s still true. And there were obviously some mistakes made at FTX. And it’s unfortunate for all those people who lost money or who will lose money. I feel bad about that.”
- Alicia Kao, managing director of KuCoin, says the FTX situation is a loss for the crypto industry:
- “It’s going to hurt hundreds and thousands of users. They’re going to lose their money. And it’s definitely not a good thing for the entire industry. Like they’re not just a competitor, right? They are not just another exchange. I think [they played] an important role in the crypto industry. So I think we’re going to see, maybe there is some good news, and maybe there are some opportunities that we could also help them to protect the whole industry.”
- United States Senator Cynthia Lummis, in her public comment made before Binance officially retracted its acquisition announcement, says the situation calls for more transparent rules and guidelines for crypto exchanges:
- “The recent events that have transpired between FTX and Binance are the clearest example yet of why we need clear rules of the road for digital asset exchanges in the United States … Market manipulation, lending activity, and whether customer funds and assets were appropriately safeguarded are just a few of the many issues my colleagues and I need to consider in the coming days. Transparent and fair exchange regulation, which is provided for in the Lummis-Gillibrand Responsible Financial Innovation Act, is essential to ensuring customers are protected while still promoting responsible innovation.”
- Fabian Astic, managing director and global head of DeFi and Digital Assets at Moody’s Investors Service, told Forkast in an interview that the FTX situation could put the traditional finance sector at risk:
- “Now, the question that remains is the link between crypto finance and what’s happening here with the FTX developments and traditional financial markets. And I would say that so far crypto losses have been largely contained within the crypto world and there’s been very little contagion from crypto finance into traditional financial markets. And the reason is that connections between crypto finance and traditional finance are pretty limited.
- “That being said, we’ve seen more and more traditional institutions being exposed to crypto assets and there are new assets and structures bridging the two worlds. And because of those links, if risks like leverage build up in crypto finance, where those risks are hard to track because of the lack of transparency that I mentioned before, this could lead to instability in traditional finance.”
- Stephen Innes, managing partner at SPI Asset Management, says this could be the “tipping point” for crypto investors who endured a series of insolvencies earlier this year:
- “You can’t deny the growing correlation between Bitcoin and risk assets. The FTX news is having an outsized effect on asset prices. Once the second-largest crypto exchange globally, FTX has told investors that without more capital, bankruptcy is likely. Hence all ships were sinking on the crypto tumult. Bitcoin spillovers are not negligible, and given how widely crypto coins are held, it could mean more forced liquidation of other assets to cover margin calls as long position investors were massively wrong-footed.
- “Unfortunately, for crypto buyers, there is no lender of last resort. Hence the selloff could have more legs to run as industry liquidation chasers remain on the hunt selling a variety of cryptos and native FTX coins to protect their downside as the crypto contagion effect roils. Indeed, this could be a tipping point for crypto after investors were left bag-holding a series of significant industry insolvencies earlier this year.”
- The Binance statement:
- “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance wrote on Twitter.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance explained, adding that as the crypto space becomes more resilient, players that misuse user funds will naturally be “weeded out” by the free market.
The tweet comes only a day after Changpeng Zhao, Binance chief executive officer (CEO), confirmed on Twitter that Binance had reached a non-binding deal to acquire FTX facing liquidity crunch. However, Zhao did mention in his tweet that his exchange could “pull out from the deal at any time.”
On Nov. 7, Zhao announced on Twitter that Binance is liquidating all of its reserves of FTT, FTX’s exchange token, which contributed to the decline of the token price. FTT is valued around US$2.52 per token at the time of publication, while it was traded around US$25 just a week ago, according to CoinGecko data.
FTX sister company and trading arm Alameda Research’s balance sheet of US$14.6 billion in assets were reportedly filled with the FTT token which plummeted over the last few days, suggesting that Alameda and closely-tied FTX face insolvency.
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