Nov 11 (Reuters) – Crypto exchange FTX filed for U.S. bankruptcy on Friday and Sam Bankman-Fried stepped down as CEO, following a liquidity crisis that prompted the intervention of regulators around the world.
FTX, the crypto-trading fund affiliated with Alameda Research, and about 130 other companies in Delaware have filed for Chapter 11 voluntary bankruptcy, FTX said.
MARKET REACTION:
Shares of crypto and blockchain-related firms fell on Friday after FTX, one of the largest crypto exchanges, said it would begin bankruptcy proceedings in the United States, triggering a potentially major meltdown in the industry.
Comment:
DENNIS DICK, MARKET STRUCTURE AND TRADING ANALYST AT TRIPLE D TRADING
“The bankruptcy filing happened right before the opening, so it literally brought down the entire stock market.”
“There was a lot of bad news that was already expensive. You would think that these stocks would fall heavily on this news but many actually came out with significant losses. The volatility was bought.”
THOMAS HAYES, MANAGING MEMBER AT GREAT HILL CAPITAL LLC IN NY
“This rumor is sold. Now we have news. What was feared has now been done and I wouldn’t be surprised if in the coming days you see crypto start to find its bottom.”
“The shock was that this guy was the face of the crypto industry and turned out to have no emperor’s clothes. And I think the real danger going forward is that faith is being lost in an asset class that is not backed by anything.” .” It’s going to be a must-play.”
JAY HATFIELD, CEO OF CAPITAL INSTITUTE IN NEW YORK
“Bitcoin fell when the bankruptcy was announced dramatically and that tends to drive down most crypto stocks like MicroStrategy because they own Bitcoin.”
“Well, they’ve already taken a pretty big hit. And overall, we’re in an uptrend after the inflation report. All of these securities are high-yield, high-risk, so if the market goes up, that’s going to push them higher.”
JOSEPH EDWARDS, INVESTMENT ADVISOR AT SECURITITE CAPITAL
“The main risk here is that the US agency is involved – this really means that the risk of infection is now entering areas that are supposed to be fenced off, at which point it becomes very close to an existential problem because of the regulatory effects. “
“The failure here is fundamentally a failure of industrial structure and not a failure of the capital class, but when US institutions and authorities begin to get involved, the difference between the two begins to emerge.”
ERIC CHEN, CEO AND CO-FOUNDER OF INJECTIVE LABS
“Today’s events will have strong repercussions across the regulatory environment as SBF was a major donor to the elections (sixth largest donor overall) so politicians will likely have a negative impact on centralized cryptocurrencies moving forward. .
“Washington has lost one of the most important voices in crypto and I’m not sure who exactly fills that void in the short term. I doubt that this volatility will be short-lived because it is largely driven by liquidation. is suddenly directed.
“I think the events of the past few days just add more fuel to the broader narrative of decentralization and how important it will be for users to always have access to their unlimited funds. In the long run, I think stakeholders in Crypto will be even more wary of centralized platforms or exchanges which will be a huge boon for decentralized finance as a whole.”
OMID MALEKAN, ADJUNCT PROFESSOR AT COLUMBIA BUSINESS SCHOOL
The “what” of this latest crisis seems to be that FTX did things with customer funds that shouldn’t have happened and now some amounts are missing. We need more details to know what the exact injustice was and how much can be recovered.
“The answer to ‘how’ is even more difficult because unlike Terra, which was always questionable, or Celsius, which like any borrower could face a run, FTX was almost universally accepted as safe, especially after that playing white knight has failed others. Crypto players. The SBF CEO has taken a leadership role in things like regulation, and it seems almost pathological that someone is running a massive fraud while simultaneously working with Congress to clean up the industry. . Ultimately, the lesson here is that the crypto industry needs to stop believing in cults of personality, no matter how well-intentioned they may seem.”
RICHARD GARDNER, WORLD PRESIDENT OF MODULUS GLOBAL, BIG TICKET SOFTWARE PROMOTIONS FROM WALL VIEWS
“It is certainly no surprise that FTX finds itself in this position to begin with. SBF’s independent approach to industry consolidation was ill-conceived from the start. Although it is in a position to successfully make acquisitions, we initially no. economic distress. It was a waiting game to find the best deals associated with the most desirable institutions. Shooting for the moon so quickly was a sure way to invite such a risk, and although it is not a surprise , it will definitely give retail investors a sense of peace.”
GREG KIDD, CO-FOUNDER OF VC FIRM HARD YAKA
“Sam and FTX were playing a long-term strategic game (chess). Unfortunately for them, CZ and Binance chose to play a short-term tactical game (checkers) that exposed FTX to the weight of liquidity in Alameda which was dangerous. .for the price shocks that CZ/Binance can create by throwing private assets in. When FTX stepped out of line to try to help Alameda weather the storm, the trap sprung and brought the entire SBF ecosystem to its knees. “
“CZ and Binance flexed their muscles last month by removing Coinbase’s USDC and Circle from their exchange, draining liquidity from the world’s second most popular stablecoin in favor of their own stablecoin. Highlander’s hardball tactics won the day again, Binance’s hand on strengthened their account. #2 and #3 players in the industry.
“It’s a murky world that just got tougher. In the longer term, CZ/Binance may have leveraged its soft compliance controls like Russia’s version of Silk Road and a way for the North to launder the proceeds. is its own development. Korean hackers.”
JOHN GRIFFIN, CEO AND FOUNDER OF INTEGRA FEC, WHICH ADVISES GOVERNMENT AGENTS AND LAW FIRMS INVESTIGATING FINANCIAL FRAUD, AND PROFESSOR OF FINANCE AT THE UNIVERSITY OF TEXAS.
“The final question is how much of a contagion effect this will have on other exchanges and where other potential losses could occur.
“Typically there’s a lot of cross-collateralization. So to some extent when you have a large entity like this that goes down, all the assets tied to that FTX transaction go. It’s kind of a big financial crisis. You have people who have guardians or assets that are connected to FTX. It causes someone else to go down.
“You have uncertainty in crypto, so you don’t know if someone else is going to go bankrupt and you might not be able to extract your crypto (from other players) on the blockchain. Then this will eliminate a lot of cross-currency, a lot of system effects. rake, put pressure on crypto prices and potentially lead to the collapse of other players.Therefore this could lead to a financial crisis in the crypto space.
“It looks like Alameda is billions of dollars short of their obligations. That means they owe billions of dollars to somebody. So those parties, because they’re hurt, can cause them to foreclose on other entities. and eliminate those institutions. other institutions. You have an incentive to basically break all partners, you want to eliminate your opponent’s risk, just like you want to get out of a custom trade that you made. You pull everything into the money. tight. So you may sell bitcoin or other cryptocurrencies to raise money. This puts pressure on crypto.
Compiled by the Global Market and Financial Event News team; Editing by Richard Chang
Our Standards: The Thomson Reuters Trust Principles.
