Why is crypto tanking? ELI5: The FTX-Binance drama in simple terms By skesslr
), a popular competitor to the Ethereum blockchain and in which FTX held a major stake, was one of the biggest losers – falling nearly 50% on Wednesday, and down 93% from its 2021 high., it will erode trust in the industry and strike ire among regulators eager to tame it.last week from CoinDesk, and the market’s reaction to what they contained, pulled the mask off SBF to show that his crypto exchange firm FTX – like so many failed exchanges before it – was at risk of insolvency.
With the deal now apparently not going through, investors are left unsure if they’ll be able to recover their funds.Documents uncovered last week by CoinDesk showed that Alameda Research – a trading and investment juggernaut founded by SBF – had its finances deeply intertwined with those of FTX. These rumors are far from confirmed, but they were the first inkling for many that deposits in the FTX exchange were not as safe as hoped.Binance would be unwinding its own position in the FTT tokenWhen CZ announced that he would be dumping FTT onto the market, other holders of the token took note, panic-selling their FTT tokens and racing to withdraw funds from FTX as rumors of insolvency circulated.
Now that the deal has fallen apart, depositors in FTX risk losing some of their funds unless someone else is willing to come to the rescue, which may not happen depending on the size of the hole in FTX’s balance sheet. If a rescue doesn't come, the next step for FTX may be to declare bankruptcy. , SBF fashioned himself as a sort of modern J.P. Morgan, bailing out firms such as BlockFi and Voyager Digital, which went bankrupt after mismanaging user funds behind the scenes .
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