A Crypto Crash Is Taking Shape And It’s Not Just FTX’s Fault
Hi, this is Mark DeCambre, editor of MarketWatch, replacing our crypto reporter, Frances Yue, in this episode of Distributed Ledger.
And what an enlightening weeks it has been for the crypto world. We’ll break down the continuing dominoes falling in the wake of the meteoric fall of FTX Group and gather insights on what’s in store for the industry as a whole.
You can still find Frances on Twitter at @FrancesYue_ but you also find me on @mdecambre.
Please contact us to share your thoughts and stories on the market, as we aim to unpack the latest developments in the world of digital assets.
The emperor has no clothes
For the past three years or so, Sam Bankman-Fried has operated with little or no oversight and accounting protocol and few, if any, funders or stakeholders in his company have performed rigorous auditing of his business practices. .
FTX’s new CEO John J. Ray, who is tasked with overseeing the company’s bankruptcy (whether in the Bahamas or Delaware), perhaps, rightly said:
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial reporting as has happened here. From compromised systems integrity and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.
This statement comes from an executive who presided over the restructuring of energy giant Enron.
Wednesday, Vox published a damning exchange between Sam-Bankman Fried and journalist Kelsey Piper, where he recognizes that he put on an ethical and honest personality to establish trust.
“That’s what reputations are made of, to some degree,” he wrote, according to the Vox article. “I feel bad for those who got screwed over by this.”
But it’s not just about Bankman-Fried, but also about the apparatus that enabled his masquerade, including journalists from here, there and elsewhere.
It also speaks to a lack of regulation around an industry seen as promising but vulnerable to corruption, fraud and other malfeasance, perhaps in part because it is seen as an obscure segment of the world. financial.
There are lessons to be learned from this episode and they will continue to play out in the weeks and months to come. We’ll all get a better idea of that next month when the FTX founder likely visits Washington, DC.
WednesdayU.S. House Financial Services Committee leaders said they plan to hold a hearing in December focused on the collapse of FTX and the “wider implications for the digital asset ecosystem.”
Crypto at a Glance
BitcoinBTC USD,
gained a bit, up 0.1% over the past week, and was trading at around $16,700 on Thursday, according to FactSet.
set of facts
Ether rose 1.9% over the same period to around $1,211, according to data from FactSet.
set of facts
Meanwhile, FTX native coins, known as FTT tokens, are down nearly 28% in the past seven days, trading at $1.59, according to data provider CoinGecko.
Cryptographic metrics
| The biggest winners | Price | % return over 7 days |
|
Trust Wallet |
$2.14 |
105.3 |
|
GMX |
$39.75 |
50.5 |
|
Chiliz |
$0.23585 |
49.1 |
|
teen lido |
$1.22 |
34.7 |
|
The open network |
$1.75 |
28.7 |
| Source: CoinGecko as of November 1seven |
| The biggest losers | Price | % return over 7 days |
|
Tokenize Xchange |
$7.08 |
22.9 |
|
WhiteBit Token |
$5.42 |
21.2 |
|
Houbi |
$4.66 |
20.3 |
|
Chronos |
$0.069460 |
13.4 |
|
Close to protocol |
$1.85 |
7.8 |
Ripples
Earlier, Frances chatted with Evgeny Gaevoy, CEO of Wintermute, a company with around $55 million blocked on the FTX.com platform currently.
Gaevoy had some interesting thoughts on Bankman-Fried and, perhaps unsurprisingly, he was as shocked as anyone to find out the level of dysfunction at play at FTX:
““He was obviously like, not an ordinary person. But he didn’t hit me, in the few conversations we had personally he never hit me like someone [who[ could defraud the whole industry.””
Gaevoy said he’s particularly stunned by the magnitude of the losses at FTX, estimating it to be somewhere in the order of $10 billion. That said, he thinks that the damage is contained, even within the realm of crypto.
“I guess what we are looking primarily on our side is if any other centralized exchanges can be affected,” he said. “And also we know that a lot of exchanges kept some of their balances on FTX as well to basically access liquidity or maybe even to use it as a custodian of sorts,” he said.
Some entities, however, are showing cracks: Crypto financial services firm Genesis Global Trading’s lending arm is pausing redemptions and new loan obligations.
The unit, Genesis Global Capital, is also the lending partner at crypto exchange Gemini’s Earn program. And Gemini, a crypto exchange launched by Winklevoss brothers Cameron and Tyler, reportedly saw $485 million in outflows, amid fears of spillover from FTX.
State Street custody
Although the effects of the FTX collapse may be felt for months and years, the sentiment out of State Street, suggests that the crypto industry is resilient.
“Our institutional clients are still focused on crypto and digital assets,” Jay Biancamano, head of a digital asset arm of State Street, told MarketWatch in an interview.
He said he expected further contraction in the volatile industry but characterized it as fairly typical for the nascent sector. He said it is worth pointing out that the roughly 14-year-old crypto industry is in retrenchment mode as well as traditional sectors.
“I think it’s always good for a market to pause,” Biancamano said. “And I don’t like to use the term crypto winter because if you look at the equities market, certainly and other markets, they’re contracting as well,” he said.
State Street, one of the biggest custodial banks in the world, has been among vanguard of traditional institutions looking to offer financial services to clients interested in owning crypto.
“So, I think really our clients are looking for us not only to move into the [crypto] business, but being able to support, you know, ancillary services, like loans and…and that’s what we’re preparing to do. We want to be a full service provider for our customers,” he said.
He said there’s more to the works at State Street as he develops his offerings.
Crypto companies, funds
Coinbase Global Inc. COIN Shares,
are down 2.8% for the week at around $48.84. MicroStrategy Inc. MSTR,
is down 6.2% at $170.59, so far on the week.
Mining company Riot Blockchain Inc. is down 11.2% at $4.62 on Thursday night. Shares of rival Marathon Digital Holdings Inc. MARA,
was down more than 18% to $8.02, over the past week. Another miner, Ebang International Holdings Inc. EBON,
lost nearly 10% in the past week from Thursday and was trading at 28 cents.
Overstock.com Inc. shares OSTK,
lost 6.9% to $22.95, over the week.
Shares of Block Inc. SQ,
formerly known as Square, is up 4.5% to $67.47 for the week so far. Tesla Inc. shares TSLA,
slipped 0.5% to $182.80.
PayPal Holdings Inc. PYPL,
rose 2.5% to trade at around $86, over the period. Nvidia Corp. NVDA,
rose 6.3% to $156.38 last week.
Advanced Micro Devices Inc. shares AMD,
jumped more than 14% to $73.47 for the week on Thursday night.
Among crypto funds, ProShares Bitcoin Strategy BITO,
edged up 0.4% to $10.15 on Thursday, while its ETF Short Bitcoin Strategy BITI,
lost 3.3% to $41.61. Valkyrie Bitcoin BTF ETF Strategy,
took 0.5% to $6.36, while VanEck Bitcoin Strategy ETF XBTF,
lost 0.2% to $16.23.
Grayscale Bitcoin Trust GBTC,
fell 3.3% to $8.75.
must read
.
#Crypto #Crash #Shape #FTXs #Fault #crypto strategy
