FTX On The Edge Of Bankruptcy

Binance refuses to buy FTX

Third, CZ announced the deal about possible acquisition of FTX, however he warned that it will be pending until the due diligence process is complete. After just half a day, Binance announced that as a result of due diligence as well as the latest news reports regarding the mishandling of customer funds and the alleged investigations by US authorities , Binance has decided not to pursue the acquisition of FTX.com. They hope to be able to assist FTX clients with liquidity, but the problems are beyond their control or ability to help. And Binance refused to buy FTX because the financial hole was too big, not just liquidity.

Regarding the financial vulnerability, according to a report from Bloomberg cited from an unnamed source, this financial hole actually exists. The article said that Bankman-Fried told investors that FTX was short of $8 billion after the liquidity crisis. The Wall Street Journal also cited the same number, adding that FTX needed a certain amount of cash to cover customer withdrawal requests.

Earlier, Sam Bankman-Fried tried to reassure investors that the company’s assets were fine. However, he also deleted tweets from the day before that said FTX had enough assets to cover customer holdings. At the same time, customers have withdrawn more than 6 billion USD from their exchanges. It is believed that this tweet is false and that FTX and Sam are being sued by investors for false information causing them to lose money.

Alameda Research’s website is down. As for the FTX exchange, it is back to work but also announced to stop withdrawing and recommend not to deposit money into the exchange.

Sam texted him apologizing for his responsibility during the event (on the Slack chat app). After that message 24 hours, the agents heard nothing from Sam. There are many channels of information circulating that Sam has filed for bankruptcy but this has not been confirmed.

The crypto market is scared and plummets. BTC price dropped to as low as $16,000 and then retraced around this level. The event of FTX has shaken the confidence of many investors in the market. FTX’s FTT token also dropped around $2. SOL is also affected by Sam Bankman-Fried who is a big investor in this ecosystem, causing many investors to fear being affected. Although it is a private network, many tokens that are invested by FTX may also be affected by FTX events.

If the financial vulnerability of FTX reported by Bloomberg is true, the collapse of FTX will greatly affect many institutions and investors in this crypto market. In particular, companies that are lending FTX mortgages will be hardest hit. Such associated collapse events have occurred with Voyager and Three Arrow Capital. The story of FTX will also become a great example for lawmakers to use when making legislation and tightening the market.

Many investors are also concerned that other exchanges may be affected by the event of FTX. So crypto exchanges have now continuously made their reserves publicly available for fear of insolvency that will grapple with crypto investors after the contagion risk originated. from liquidity problems at FTX.

Over the past 24 hours, nine exchanges including Binance, Gate.io, KuCoin, Poloniex, Bitget, Huobi, OKX, Deribit, and Bybit have made separate statements that they will make their Merkle tree reserve certificates public to increase transparency. White. Markets and information are very very chaotic.

Hard times make strong factions

This is a big event for the crypto market after a few previous events about Voyager and Three Arrow Capital. FTX, the third largest exchange in the crypto market, has also collapsed. It is a big blow that makes confidence in the crypto market shaken.

Trust is a big thing that affects the market. A similar event happened in the US financial markets in 2008. At the time of crisis and high interest rates, a series of large companies that people thought could not collapse went bankrupt, such as Lehman Brothers. . So the market lost confidence in all the rest of the banks and thought that those banks could be in the same situation. At that time, the Fed had to intervene and provide short-term loans to support thousands of banks and companies to regain the market’s confidence.

Crypto is in a similar phase. However, the crypto market does not have the Fed’s backing, it stands on its own and has existed for many years. This is the event the crypto market will have to go through. Thuan believes that the market will also be able to pass and continue to grow.

In the history of crypto, there have been many events that thought that BTC and crypto would completely collapse, but the market continued to rise and overcome those difficulties. Like in 2014, the largest Mt.Gox exchange at that time was hacked and collapsed, or Dao Hack (2016), China banned crypto, Bitcoin civil war (2017), … but the market also passed.

Bitcoin has been claimed to crash more than 400 times in its history but it is still the biggest coin in the market today. Those who stay with the market are long-term investors who believe in this market. Bad events, difficult circumstances will eliminate weak and bad companies. And good companies and solid investors will continue to stay and develop with the market. Hard times create strong factions, they continue to get stronger creating periods of prosperity. Good times are easier and also create weak sides. It is this weak faction that creates the difficult times when it fails to hold up. So do investors consider themselves the strong side or the weak side in the market?