To put it politely, it turned out to be a turbulent few weeks for the crypto industry. The rise and fall of Sam Bankman-Fried turned into one of the most spectacular fires in financial history.
A math whiz, he founded cryptocurrency exchange FTX in 2019, was worth around $26 billion last month alone, donated more than $40 million to the US Democratic Party, and led the movement to “effective altruism,” before the whole house of cards happened has collapsed in the past two weeks, wiping out Bankman-Fried’s entire fortune, eliminating backers that included high-profile names such than Sequoia and Softbank, and potentially wiping out the savings of hundreds of thousands of people who have traded with the company.
In its wake, digital asset brokerage Genesis and crypto exchange Gemini halted redemptions and restricted trading, This is usually not a sign of a healthy business as the crisis has started to spread to other parts of the crypto industry. Regulators, lawyers and judges will no doubt spend years trying to clean up the mess.
In this context, you might imagine that the prices of Bitcoin and other major digital currencies have fallen to near zero. After all, who wants to own a string of numbers that you can no longer trade and probably never get paid for even if you manage to sell them?
Here’s the interesting point, though. It moved, but not as much as one might expect. A month ago, when FTX was still completely solid, Bitcoin was trading at $20,000 per unit. And now? It fell to $16,500 per unit. That’s a 15pc drop.