The effects of the massive earthquake in the trillion-dollar cryptocurrency industry last week continue to reverberate on Monday.
Cryptocurrency prices fell again as the crisis that swept the market over the weekend intensified. Bitcoin, the world’s largest cryptocurrency, is down about 65% so far this year. It was trading at around $16,500 on Monday, according to CoinDesk. Analysts believe it could fall below $10,000.
ether, The second most valuable cryptocurrency in the world, not much better. CoinDesk data showed that it was trading at around $1,230 on Monday, having fallen more than 20% over the past week.
The drop comes as investors continue to grapple with the stunning internal meltdown of FTX, one of the biggest and strongest players in the industry.
Some industry insiders said the company’s collapse led to the “Lehman moment,” referring to the investment bank’s 2008 meltdown that sent shockwaves around the world.
This episode will not only destroy confidence in the cryptocurrency industry, but will also encourage global regulators to tighten the noose around. Some of the biggest names in business have said they would welcome scrutiny, if it helps restore confidence in the industry.
Changpeng Zhao, who runs the largest Binance, said there is “a lot of risk” cipher exchange. “We’ve seen in the last week that things are going crazy in the industry, so we need some regulation, and we need to do it right,” he added.
Czechoslovakia, as it is known, was speaking at a conference in Indonesia on Monday. He said last week that comparing the current crypto turmoil to the 2008 global financial crisis “may be an accurate analogy.”
was Binance It reached a preliminary rescue agreement with FTX earlier week, but that deal fell apart almost immediately.
FTX continued its downward spiral after filing for bankruptcy on Friday. Another big name from the industry also admitted to mismanaging money, which spooked investors even more.
Here’s how things have evolved over the past few days, which indicates that the crisis is just beginning.
FTX moved its headquarters from Hong Kong to the Bahamas last year, with former CEO Sam Bankman-Fried hailing it as “one of the few places to create a comprehensive cryptocurrency framework” at the time.
On Sunday, authorities in the Bahamas said they are investigating possible criminal misconduct surrounding the company’s implosion from within.
“In light of the collapse of FTX globally and the temporary liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch is working closely with the Bahamas Securities Commission to investigate the occurrence of any criminal misconduct,” the Bahamas Police Force said in a statement. statement.
It is not clear which aspect of the rapid collapse of FTX authorities has investigated.
Bankman Fried, the 30-year-old founder of the stock exchange, was so One of the faces of the cryptocurrency industry, he amassed a fortune once totaling $25 billion that has since disappeared. He was seen as the white knight of the crypto world, and previously intervened to rescue struggling companies after the collapse of the TerraUSD stablecoin in May.
FTX, backed by elite investors such as BlackRock and Sequoia Capital, has become one of the largest cryptocurrency exchanges in the world. The Wall Street Journal reported Thursday that its collapse was preceded by a decision to lend billions of dollars in customer assets to fund risky bets by Alameda, Bankmanfried’s crypto hedge fund, the Wall Street Journal reported Thursday.
The investigation in the Bahamas came a day after the bankrupt exchange announced that it had launched its own investigation.
On Saturday, FTX said it is looking into whether crypto assets have been stolen. Cryptocurrency risk management firm Elliptic said that $473 million in crypto assets has been seized from FTX.
FTX General Counsel Ryne Miller said Saturday that the company “initiated precautionary steps” on Friday and moved all of its digital assets offline. The process was accelerated Friday evening “to mitigate damage when unauthorized transactions are monitored.”
Miller said FTX was “investigating anomalies” regarding movements in crypto wallets “related to consolidating FTX balances across exchanges.”
He added that the facts are still not clear, and the company will share more information as soon as possible.
With the scrutiny of the big players in the crypto world increasing, Singapore-based website Crypto.com has admitted to mistakenly sending more than $400 million in ether to the wrong account.
Chief Executive Chris Marsalek said Sunday that 320,000 ETH was transferred three weeks ago to a company’s account at rival exchange Gate.io, rather than one of its offline or “cold” wallets.
Despite the refund, users withdraw their funds from the platform, fearing that it will crash like FTX.
“We have since strengthened our process and systems to better manage these inland transfers,” Marsalek wrote on Twitter on Sunday. The platform’s token has dropped more than 20% in the past 24 hours, according to CoinDesk.
Marsalek said Monday that his company has acted “as a responsible and regulated player since its inception” and will soon prove “all the naysayers… wrong in our actions.”
He added that Crypto.com has 70 million people on its platform globally, and its business model is “totally different” from FTX.
“We have not taken any risks with a third party, we do not run a hedge fund, and we do not trade clients’ assets,” he said.
Marsalek said his company will publish an audit report outlining its reserves soon.
At the Bali conference, Binance Chairman Zhao noted that regulating the industry will not be easy.
“The natural response of the authorities is to borrow regulations from traditional banking systems…but cryptocurrency exchanges operate very differently from banks,” he said.
“It is very, very normal for a bank to transfer users’ assets for investments and try to generate returns,” he explained. He said that if the cryptocurrency exchange operated in this way, “it would almost certainly go down.” He added that the industry as a whole has a role to play in protecting consumers.
“The organizers have a role…but they can’t protect any bad player,” he said.
Matt Egan, Ramisha Maarouf, and Alison Moreau contributed to this report.
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