FTX Continues Drama, Crypto Leaves Exchanges Massively

Market situation

US stocks fell slightly in the second session of the week on all three indexes. However, stock futures are more positive with an uptrend. Oil prices have held for some time around $85 per barrel, a level in the middle of US and OPEC expectations. Gold fell slightly to 1771 USD/ounce.

Bitcoin rebounds slightly but remains below $17,000. Altcoins also rose similarly.

The market received upbeat information from the Fed and DXY. Federal Reserve Vice Chairman Lael Brainard said that the central bank may soon slow down its rate hikes. That doesn’t mean the Fed will stop raising rates, but it will at least pick up pace after four consecutive Fed hikes of 0.75%. FedWatch futures show that the majority of investors expect the Fed to raise interest rates by 0.5% at its next meeting in December.

Companies continue to lay off employees. The latest is Amazon, which is planning to lay off about 10,000 employees in organizational and technology positions starting this week. Companies actively lay off employees in case the economic situation could worsen. This is a huge difference from 2008, companies forced to lay off employees because of losses. Another difference is that in the real estate market, mortgage borrowers in this market have better credit scores and are more tightly regulated. They are people with income and ability to repay. If unemployment rises too high, people in this group will be greatly affected, which will also adversely affect real estate.

And Twitter, after being acquired by Elon Musk, continues to lose money. Because many large companies have withdrawn advertising from this platform and wait until Elon has clear directions on the development direction of Twitter.

Update after FTX bankruptcy

The market fell due to the continued influence of FTX. At BTC’s price around $16,000, most miners are losing money selling their BTC at this level. For small miners, they will have to sell their BTC to stay afloat. As for the large miners with financial room, they can still continue to mine and accumulate BTC, especially those mining companies that have fully booked profits in 2021. They will wait when the price of BTC increases, then they will sell to take profits later.

The collapse of FTX also confused the market and investors. According to Cointelegraph statistics, in the past week, more than 3 billion USD of Bitcoin has been withdrawn from exchanges. On-chain data also shows a sharp drop in the number of BTC on exchanges. Fearful investors withdraw their crypto from exchanges.

When people are scared, this is also a time when many people can take advantage to buy BTC and crypto at low prices. Whale wallets ranked third in terms of consecutive BTC deposits after the FTX incident broke out.

The company that was affected shortly after the bankruptcy of FTX was BlockFi. BlockFi suspended withdrawals this past Thursday. This exchange is also facing the risk of bankruptcy because of its great association with FTX. BlockFi itself is said to have a balance sheet hole of approximately $800 million.

Many information shows that companies like Binance.us, Curve are in talks to buy BlockFi credit card program and their customers have about 87,500 BlockFi accounts.

FTX hacked?

FTX was hit by a late Friday night attack that resulted in over $600 million in crypto and the exchange’s wallets being withdrawn. FTX’s new CEO John Ray admitted that the exchange was hacked and said that they are taking “precautionary steps … to minimize the damage. Earlier, there was a message sent by FTX. posted in the FTX Telegram group by someone named Rey saying that FTX is hacked and users should not log into their app.

New details about the hack have led to speculation on Twitter that it’s possible that FTX owner Sam Bankman-Fried or someone in his close community may have been behind the hack to get rid of assets.

After this event happened, Tether blacklisted 3.9 million USDT on AVAX and 27.5 million USDT on SOL. In addition, the FTX hacker’s address contains approximately $340 million worth of cryptocurrency, including 160k ETH (worth about $201 million), 85.9 million stablecoin, 148k BNB ($41.7 million), 10 thousand PAXG tokens ($17.8 million), 145 thousand SOL tokens ($2 million). There is some money sent from the hacker wallet to the Hacken exchange. The exchange said it knew the identity of the wallet.

As for Sam Bankman-Fried, co-founder Gary Wang and chief technical officer Nishad Singh are said to be in the Bahamas and being “under the supervision” of local authorities. Rumor has it that they were recaptured after attempting to flee to Dubai. Alameda Research chief executive Caroline Ellison is known to be in Hong Kong.

The Block’s Frank Chaparro said that he confirmed that in the FTX case, there was FTX’s system that effectively allowed Alameda to borrow from FTX for an unlimited amount. Basically, if a user deposits 1 million USD then Alameda can withdraw up to 1 million USD from FTX. If this is true then Sam Bankman – Fries risks being held liable for fraud.

Politicians cut ties with FTX

After FTX filed for bankruptcy and collapsed, a series of politicians or people related to Sam Bankman – Fried spoke out to cut ties with him. Lobbyists who have worked for FTX and Protect Against Pandemic also say they severed ties with the FTX exchange after it collapsed. The fall of FTX has prompted lawmakers including President Biden to take a closer look at the company and the crypto industry at large.

A famous person in the investment world, Kevin O’leary, also spoke out. He said that his investment in FTX is considered a complete loss. And he realized he was being taken advantage of by Sam and FTX when he was a brand ambassador for FTX. In mid-June, Kevin also shared that the bottom of this crypto market will appear when a large company collapses, then the market will recover. But he did not expect that it could be the FTX company that he invested in and communicated for. He demanded legislation for the crypto market.

Senator Cynthia Lummis also said that Congress was absorbed in other things and ignored the crypto market. She thinks the collapse of FTX may not happen if the Lummis – Gillibrand bill is passed. The congressman also called for a law for the crypto market soon.

SEC Chairman Gary Gensler was also asked in an interview with CNBC about FTX. The reporter said that the SEC often goes to handle cases, or weak small objects, but big events like Voyager, Three Arrow Capital and most recently, FTX can’t handle it. So what has the SEC really done for the crypto market? Mr. Gary was evasive and answered roundabout to this topic. Mr. Gary is also mentioned often meeting Sam at the government office. Many people accused him of having a relationship with Sam and helping FTX develop smoothly and easily bypass the legal loophole. Therefore, they argue that Gary Gensler should also be partly responsible for the collapse of FTX.

Next, exchanges continue to publicize the amount of crypto in storage. In the past few days, Crypto.com is talked about by having large amount of ETH transferred through Gate.io and then transferred back with less amount. This worried investors, and Crypto.com said that the transfer was by mistake. But in a sensitive time, some people say that Crypto.com is in trouble. CZ’s shared tweet says that any exchange that moves money before or after proving the asset is a sign of a problem and users should withdraw money from it. This share makes investors worry and bewildered that these two exchanges have problems.