JVTech News After FTX, the situation of another cryptocurrency giant is worrying…
While the second largest cryptocurrency platform (FTX) officially filed for bankruptcy on Nov. 11, the fallout already seems to be being felt across the industry. In fact, a cryptocurrency giant already seems to be feeling the effects of the anxiety-provoking situation that reigns on the virtual currency market.
The critical situation of FTX puts the entire cryptocurrency market in difficulty
Considered the second largest platform for buying and reselling cryptocurrencies, FTX has recently experienced a spectacular slump over the past few days. It all started last November 8, when the price of the platform’s crypto token (FTT) dropped.
This critical situation is the consequence of a more than fragile state of the treasury of Alameda Research, the trading company of the CEO of FTX. Specifically, all of the company’s share capital was held in FTT, the token of the FTX platform.
News that scared the entire cryptocurrency investor as in the event of a fall in the price of FTT, the company exposed FTX very broadly until it potentially defaulted – and it didn’t take long for that to become a reality…
Despite attempts by Sam Bankman-Fried (CEO of FTX and Alameda research) to reassure users, nothing has managed to hold back the tornado that has hit the FTX platform.
Therefore, on November 11, the company officially filed for bankruptcy in accordance with American law. Since then, many expect more companies to join FTX in the fall…
FTX: Crypto Platform Takes a Collateral Victim
As with the Terra Luna crash, it’s a safe bet that many companies related (closely or indirectly) to FTX will suffer the same fate in the coming weeks.
The first victim of this unfortunate event is the Crypto.com platform.
The cryptocurrency exchange platform, which you have surely seen on the jerseys of the UFC fighting organization or even on the Lakers in the NBA, is being targeted by several budding investigators.
During a recent audit, the data collected revealed that Crypto.com’s funds were based on very fragile foundations, a scenario reminiscent of that of FTX. Indeed, out of 2.88 billion euros of capital, the company would hold 558 million dollars in Shiba, or about 20% of the funds.
This news is not reassuring for users since the Shiba is what is referred to in the crypto community as a “shitcoin”: a highly speculative currency and not based on any fundamental utility. So, if the value of the Shiba splits soon (which is not impossible given the current environment), Crypto.com’s cash flow would take a huge hit.
To reassure the majority of users, the platform spokesperson quickly spoke about the situation in CoinDesk:
“The reason our proof of reserves includes Shiba is that we keep our users’ balances at a 1-to-1 ratio. So our proof of reserves is driven by our clients’ holdings”
Despite attempts to reassure investors, the company continues to cultivate suspicions among users. The financial media outlet CNBC notably revealed that the last company of the crypto.com CEO had filed for bankruptcy in 2016. All this has inexorably created a general climate of mistrust.