The news got even worse on Wednesday, after CoinDesk reported that FTX’s balance sheet looks so bad that Binance might walk away from the deal—potentially leaving Bankman-Fried and his investors in the lurch.
Another financial disaster is roiling the crypto markets, this time at FTX, the massive cryptocurrency exchange run by Sam Bankman-Fried, who had positioned himself as the poster boy of responsible crypto investing.
about "third-tier exchanges" that he believed were already "secretly insolvent"—implying that FTX was better managed.“[Bankman-Fried] was like the grown-up in the room, the stabilizing voice of reason,” David Yermack, a professor at the New York University Stern School of Business, told The Daily Beast. “And it turns out there was nothing there.”What is FTX? What is Binance?
Yermack compared the collapse to a traditional bank run, similar to what happened to Bear Stearns in 2008. “It’s a very old problem in finance — we've had bank runs for thousands of years,” he said. “In this case, the technology is just a little bit different.” Bankman-Fried was largely silent on what the merger meant for him, and a spokesperson declined to comment. But according to, which this year deemed him “one of the richest people in crypto,” much of his wealth is tied up in Alameda and FTT—meaning their crash could cut into his personal worth.
“This episode highlights the vulnerability of the entire crypto edifice to swings in investor confidence,” Eswar Prasad, an economics professor at Cornell University, told the Beast. “Even large and apparently financially solid institutions turn out to have wobbly foundations that crumble at the least hint of trouble.”
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