The surprise defeat of FTX is yet another shock for the cryptocurrency market. With many questions still unanswered.
The entire cryptocurrency industry continues to fluctuate, while the largest exchange platform, Binance, has given up on buying its competitor FTX, which it had to bail out in the face of a liquidity crisis. And market players are wondering how regulators will react to this new crisis in the sector.
• How did FTX dive?
A press article published in early November set a major cryptocurrency exchange, FTX, and its boss, 30-year-old Sam Bankman-Fried, in turmoil, who counts giant BlackRock or a fund among the company’s investors. Canadian pension.
The specialist media Coindesk claims that a fund created by “SBF”, Alameda Research, is made up 40% of a cryptocurrency issued by FTX, the FTX Token (FTT).
“FTT is a token that can be issued without consideration, and SBF controls the two companies. You talk about a conflict of interest …”, Dan Ashmore, an analyst at Invezz, offended in a statement.
FTX must now find $ 8 billion to escape bankruptcy, reports the financial press. Difficult task given the distrust of investors. The Sequoia Capital fund, which had invested in FTX, has already told its clients that the platform’s “solvency risk” made them consider the $ 213 million invested lost.
Sam Bankman-Fried apologized on Twitter Thursday, saying he was trying to raise money to “be in good standing with users.”
• What was Binance’s role?
The role of Binance’s number one in the fall of FTX, which was one of its main rivals, is staggering: Since Sunday, Changpeng Zhao said he wanted to get rid of the FTTs he owned, then buy back his core business, eventually ending the business. transaction.
And the FTT price didn’t jump when Coindesk’s article was published, awaiting the “CZ” message on Sunday.
For Charlie Erith, of Byte Tree Asset Management, it is “a master stroke, but perhaps not on purpose”.
In a letter to his employees that he himself posted on Twitter, Mr. Zhao defended himself against any Machiavellian plans when the acquisition of FTX.com was still on the agenda: “The fall of FTX is not good for anyone. in the industry, I don’t see this as a “win for us.” User confidence is shaken. “
An explanation that does not convince SBF, who sent this message on Twitter intended for “a certain opponent”: “good, you won”.
• What are the consequences on the cryptocurrency market?
The price of bitcoin has in fact fallen 20% since Sunday and, despite a rebound on Thursday (led by weaker-than-expected US inflation, which increases risky assets), it is now moving to more-seen levels in two years, to the start of the price surge in late 2020 and early 2021.
Investors fear that the FTX empire, which has stakes in multiple cryptocurrency-related projects, will have to sell its assets at all costs to survive.
The phenomenon is reminiscent of the collapse in the prices of bitcoin and other cryptocurrencies in the first half of the year, when the collapse of the cryptocurrency Terra had halved the price of bitcoin, emphasizes Nikolaos Panigirtzoglou, an analyst at JP Morgan.
“FTX and Alameda Research emerged in May-June as entities with apparently strong enough balance sheets to raise those that were most exposed to risky investments,” he notes.
Their rapid decline “creates a crisis of confidence and reduces the willingness of other cryptocurrency companies to bail them out,” he judges, estimating that the price of bitcoin could drop as low as $ 13,000. This Thursday around 7pm, bitcoin rose to $ 17,178 (+ 0.5% in 24 hours) according to data from Coinmarketcap.
• Towards a turning point for regulators?
In Binance’s press release explaining the cancellation of the FTX acquisition, the company takes note of press reports on the US authorities’ investigations. This new crisis could encourage American authorities to strengthen supervision of cryptocurrencies.
This “suggests, at the very least, a lack of transparency on the part of FTX and, in the worst case, that the funds deposited by clients were put into play for the bets that FTX was making,” explains Bradley Duke, of the ETC Group fund. .
“Even some of the largest companies in the industry are failing to separate their custody and investment arm to protect client assets,” he complains.
Binance has promised to publish its cryptocurrency reserves more transparently and has urged other exchanges to do the same. Furthermore, with the fall of Sam Banksman-Fried, the industry is losing one of the privileged interlocutors of regulators and legislators.