The current situation in the cryptocurrency industry echoes the financial crisis of 2008, and more companies may fail in the coming weeks. This opinion was expressed by Binance CEO Changpeng Zhao. Financial Times.
At a conference in Indonesia, he suggested that the market has yet to feel the effects of the crisis of the FTX crypto exchange and its associated Alameda Research.
“With the fall of FTX, we will see cascading effects. Those close to the ecosystem will be especially affected,” Zhao said.
A similar thought was expressed by journalist Colin Wu after the FTX Group filed for insolvency. According to him, the projects and tokens in which the Sam Bankman-Fried exchange and Alameda Research invested were at risk.
As FTX and Alameda begin bankruptcy and reorganization in accordance with Chapter 11, the companies and tokens they invest in are also on the verge of being liquidated. We have counted the companies that FTX and Alameda have invested in so far: https://t.co/IvkDKlddSI pic.twitter.com/tIgerIlHQB
— Wu Blockchain (@WuBlockchain) November 11, 2022
Despite the pessimistic forecast, the head of Binance expressed confidence that the industry will eventually recover.
On November 6, Zhao announced the company’s desire to get rid of the FTX utility token FTT. Assets, together with BUSD, totaling ~$2.1 billion, were the result of the company’s withdrawal from the portfolio investment in the platform.
On November 8, Bankman-Fried and Zhao announced a strategic partnership, but on November 10, Binance abandoned the FTX takeover. The company said that they would not be able to solve the problems that the exchange had.
Industry participants were quick to distance themselves from the platform of Sam Bankman-Fried and Alameda Research. One of FTX’s investors, venture capital firm Sequoia Capital, has issued a $213.5 million bad investment.
U.S. regulators have begun investigating FTX’s ties to the U.S. division and Alameda Research, according to media reports. The Ministry of Justice also became interested in the activities of the platform.
On November 9, Circle co-founder and CEO Jeremy Allair compared FTX’s troubles to the collapse of Lehman Brothers, an investment bank that catalyzed the 2008 crisis.
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