Answers to 6 Curious Questions: Which Projects Crash with FTX?

Young crypto billionaire Sam Bankman-Fried and his exchange FTX crashed this week. Huge financial losses follow bankruptcy filings and potential federal investigations. One of the questions on the community’s minds now is which projects will follow the FTX collapse…

Who is Sam Bankman-Fried and what is FTX?

Silicon Valley-born, MIT-educated Bankman-Fried, also known as SBF, founded crypto trading company Alameda Research in 2017 after missions in the philanthropic world and trading firm Jane Street. Two years later, Bankman-Fried and his group launched the cryptocurrency exchange FTX, which has the advantages of low process prices and advanced options for traders. According to Bloomberg, Bankman-Fried became wealthy by making $350 million and $1 billion in profits from FTX and Alameda, respectively, in 2020 alone.

Bankman-Fried was worth $26 billion at its peak, but his net worth fell to $16 billion when he went bankrupt. At age 30, he was one of the largest political donors in the United States. He convinced celebrities like Tom Brady and Gisele Bündchen to take over FTX. Bought the naming rights of the arena where the NBA’s Miami Heat plays.

So what happened to the stock market and its founder?

Earlier in November, crypto news site CoinDesk published a disclosure report on Bankman-Fried and his companies. The report revealed that while Alameda Research and FTX are two different companies, Alameda’s funds are mostly tied to FTT, the cryptocurrency of FTX.

A few days after the disclosure, Binance CEO CZ announced that they have decided to sell their $530 million in FTT. After that, FTX users also competed to save their funds. The exchange saw an estimated $6 billion withdrawal process within 72 hours.

Following the event, the price of the FTT token plummeted 32% within hours. It rallied once again after Bankman-Fried announced on Tuesday, November 8, that Binance will acquire FTX.

Hopes were short lived

On Wednesday, Binance announced it was withdrawing from the memorandum, citing findings from due diligence, reports of misused client funds, and the possibility of a federal investigation. The news caused FTT to drop even more. Bankman-Fried saw 94% of her net worth wiped out in a single day.

Cash-strapped Bankman-Fried began seeking out other industry rivals for bailouts, including Coinbase CEO Brian Armstrong. On Friday, FTX filed for Chapter 11 bankruptcy, and Bankman-Fried stepped down from the CEO mission.

Bankruptcy and resignation day

Bankman-Fried said on Twitter that he “sinked twice”. He attributed FTX’s crash to a combination of withdrawal requests and his own speculation about FTX’s debts. But a Reuters report suggested that other factors may be at play. Citing anonymous sources, the news service said earlier this year that Bankman-Fried transferred client funds from FTX to Alameda without telling anyone in the wake of Alameda being hit with a string of losses.

Who else did the FTX crash affect?

FTX is backed by a number of investors including SoftBank Vision Fund, Tiger, Sequoia Capital and BlackRock. Sequoia said this week that it has cut its investment in FTX to $0. The VC firm has invested a total of $213.5 million in FTX.

There’s also Bankman-Fried’s inner circle, a group of 10 who live with him and drive FTX and Alameda out of the Bahamas. Sources indicate that the set is a mix of college friends and former colleagues. Additionally, he reports that Bankman-Fried is firmly attached to his empire. That’s why they’re probably suffering heavy losses right now, too.

What does all this mean?

2022 was a tough year for the crypto market, which experienced a $2 trillion collapse in May. Now, the FTX drama is creating a huge ripple effect in the crypto market. According to CoinMarketCap, its bankruptcy reduced its total market value (TOTAL) by 12% in one day.

Industry experts suggest that the bankruptcy could encourage regulators to crash the crypto market. Moreover, it could further shake faith in the market and lead people to withdraw their crypto holdings out of anxiety. JPMorgan analysts wrote on Wednesday that a crypto showdown is imminent. Experts warned that investors should be prepared. analyst James Royal said on Friday:

As an investor, you should critically question what you’re investing in if it can evaporate over a weekend. Prices are entirely based on feeling and belief in the future of crypto… If that belief disappears, you’re left with nothing.

Which projects are following the FTX collapse?

In the aftermath of the crisis, the steepest drop in the market was Solana, once one of the top ten altcoins. The price of SOL dropped to a record low of around $12 earlier last week. SOL price lost more than 50% in just seven days. In similar form, Solana-based launchpads and NFTs followed the momentum. Volatility has sparked debate about Solana’s long-term future amid crypto analysts and blockchain developers.

According to Alex Tapscott of Ninepoint Partners, the rapid drop in SOL does not mean “death knell” for Solana. As you follow, Solana-based wrapped tokens are in great danger. In addition, USDD, the stablecoin of Tron, started to lose its stability in the dollar.

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