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A New Multi-Million Dollar Playground Takes Down the Guru Boy of the Crypto Movement

Samuel Bankman-Fried was a billionaire before the age of 30. Boy face, curly hair, math genius and shorts as usual. The nickname “The Mark Zuckerberg of cryptocurrencies” was inevitable. Although he says he doesn’t like it, his wild foray into the industry created one of the largest trading platforms out of nothing and amassed the world’s largest crypto fortune ($26.5 billion just a year ago, according to Forbes). He was very well connected with her. The collective imagination of the child gurus of blockchain technology. It all ended this Thursday. “I screwed up,” admitted SBF, as he is known in the movement that has heard him speak around the world talking about the benefits of “mass adoption” of cryptocurrencies.

Bankman-Fried platform FTX is very close to bankruptcy. It is one of the most important cryptocurrency speculation exchanges in the world, with over a million users outside the US. He is currently unable to convert his investments into real currency, Corralito announced. “FTX is currently unable to process withdrawals. We strongly discourage deposits,” a statement on its website said.

Bankman-Fried has reinvested customers’ money and cannot get it back. Now it urgently needs to inject at least $4 billion in liquid to FTX to avoid bankruptcy, although the total hole is $8 billion. Everything indicates that he will not succeed. Especially since Binance refused to do so. The largest cryptocurrency exchange entered into an agreement with Bankman-Fried to rescue the company, but its auditors were horrified when they saw FTX’s books of accounts and canceled the rescue.

“Initially, our hope was to be able to assist FTX users and provide liquidity, but these issues are beyond our control or ability to assist,” Binance said Thursday. It doesn’t look like a trick. The bankruptcy of a supposedly consolidated player like FTX, valued at $32,000 million (as much as BBVA), threatens to trigger a new earthquake that will affect the entire sector and cast even more doubt on its future.

The message left by the bankruptcy of Bankman-Fried, which according to Forbes lost 94% of its fortune in the collapse of its company, is that anyone can fall. This is exacerbated by the fact that FTX was one of the giants rescuing businesses from hacked platforms during this cryptocurrency crisis, which the movement is calling cryptowinter. What makes this new phase of cryptocurrencies fueled by the apparent collapse of FTX even more problematic is that the number of entities with strong balance sheets that can survive low capital and high leverage is dwindling. JP Morgan bank.

FTX was one of the most common crypto platforms in the public domain. In a policy to promote “mass adoption,” Bankman-Fried paid to name the NBA arena where the Miami Heat play, which would be called FTX Arena for the next 19 years, or put its mark on Mercedes-AMG. Formula 1, along with other major sponsors.

While FTX’s US business has not been affected by the issues, the risk is that the term “mass adoption” will eventually be confused with “mass toy”. This will be the fourth big hit of the year for this platform after the overnight collapse of the Terra-Luna cryptocurrency, the Celsius corralito (whose investors still have their money frozen) or the bankruptcy of the Three Arrows Capital fund.

“When a major player in the industry fails, retail customers will suffer,” Binance admitted in a statement, admitting that it is not going to bail out FTX. “It’s a sad day. We tried but…” Binance owner Changpeng Zhao wrote.

As The Wall Street Journal revealed, Bankman-Fried explained to the funds with which he seeks liquidity that he created the hole himself by pulling $10 billion from FTX and putting it into Alameda Research, its trading sister company. FTX made a loan to Alameda using money that customers deposited into the exchange for business purposes and now cannot pay it back.

“I screwed up twice,” Bankman-Fried admitted on Twitter after nearly 48 hours of silence during which her clients’ money was frozen. The baby crypto guru claims that the company’s international value is greater than deposits, and that the big problem was that on Sunday its customers withdrew $5,000 million in the afternoon when panic broke out. The company retained 6,000 million in liquidity after the loans to Alameda. Chaos served.

A total FTX bankruptcy could have unintended consequences for the crypto sector. Bitcoin, its official thermometer, has already felt the blow. It has fallen below $16,000, its lowest value in three years and nearly 80% below its peak. According to JP Morgan, it may fall below $13,000.

“These types of contingencies show that this is an asset class that is still maturing. However, given the facts, it is likely that the general market sentiment will take time to recover, that’s for sure. affects many investors, both directly and indirectly,” said Josh Gilbert, market analyst at eToro.

US authorities are already investigating what happened at FTX. Other regulators may also call on Bankman-Fried to further explain its latest moves. “The crypto asset arena is likely to come under increased scrutiny from regulators, which is understandable given recent events,” Gilbert said.

The number of Spanish FTX investors is not public. The platform with the largest implementation in Spain is Bit2Me, which has published a statement to abandon practices such as Bankman-Fried. “We want to publicly inform that we have sufficient liquidity and have never requested a secured loan,” the company said. It also ensures that it is not involved in “dangerous activities”, although financial authorities reiterate that cryptocurrencies themselves are “high-risk assets”.

“We also want to emphasize that we do not process our clients’ funds unless they request it, allowing our users to withdraw money at any time,” continues Bit2Me, which recalls that its fiscal headquarters are in Spain. He also admits that “in light of events such as those that have taken place in the sector in recent days, the first reaction may be to advocate for much stricter regulation,” in response to which he offers to cooperate with the authorities.

Regulated or not, a meltdown of the caliber of FTX is a reminder that no crypto platform is safe from crashing and neutralizing billions in a matter of hours. “Sorry,” Cryptocurrency Guru Guy tweeted, “should have done better.”

Source: El Diario





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