Worst Crypto Crash in History? $FTT plummets & FTX.com Exchange Insolvent.
Will Binance acquire FTX? Will users withdrawals go through or have we lost everything?
Today is a dark day for crypto. It’s claimed to be one of the worst events to ever happen in cryptocurrency over the 13 year history. Worse than the Mt. Gox hack in 2014. Worse than the 3AC and Luna Terra crash this year. 2022 has not been good for crypto.
FTX.com, one of the biggest exchanges in cryptocurrency is very likely insolvent.
It started with a tweet from CZ from Binance, announcing they are selling the remaining $FTT they have (about $584M in FTT). However, they wanted to impact the market minimally so they plan to sell it on Binance over the course of a few months.
Binance was actually the first investor in FTX.com, and helped them incubate. Hence they have a large stake in the platform. Although they sold their equity last year, they still have the FTT tokens.
Part of the reason for exiting their FTT stake was because FTX CEO Sam Bank-man Fried allegedly has been attacking Binance on the political front. He donated to both parties this year and has a history of political donations (like to Joe Biden in 2020 for $5.2M).
Almost instantly after the tweet, an overwhelming wave of trading opened short positions on $FTT start at $22.
@CarolineCapital the CEO of Alameda Research, the investment arm of FTX.com offers to buy the $FTT tokens off-market in hopes of not impacting the price of $FTT.
However, as the open-interest piled up against $FTT and there were no coins left to borrow to open a short position because everyone was shorting, FTT began to fall (to around $18 at first).
And simultaneously across crypto twitter rumours that withdrawals were halted on FTX.com began. A bank-run like frenzy of likely hundreds of thousands of traders all rush to withdraw their funds from the FTX before it’s too late.
Sam tries to reassure the industry in these NOW DELETED tweets.
Then, a glimmer of hope happened. Sam Bank-man Fried announces on twitter that they’ve come to a (non-binding!) agreement for Binance to acquire FTX. Their first investors have become their last. $FTT shoots back up to $22 and a temporarily sigh of relief that maybe $FTT isn’t going to zero.
And the tweet from CZ’s side:
So the price turmoil stopped. For about 30 minutes…
Then, all of a sudden, $FTT continues to plummet. Withdraws still aren’t being processed. within the following hours.
$FTT drops to a low of $2.50. a 90% drop in 24 hours.
Jail time for Sam? It could be coming.
FTX.com raised so much money at high valuations based on the $FTT holdings they held which they created out of thin air.
With the crash of FTT, Sam Bankman-Fried's net worth falls $14.6 billion in the past 24 hours to $991M.
But what about the funds of thousands of users who use FTX exchange and have funds there still?
Well, we are yet to find out if withdrawals will be processed. Here are some of the big players who have their funds stuck.
Even Alex Wice, who was often #1 on the FTX.com global leaderboards for weekly gains as much a $100M+, had all his funds on the exchange.
And the list of people who are royally screwed on this continues. Tom Brady had $650M involved.
Even the Ontario Pension Fund invested into FTX equity at a $32B valuation (but buying Bitcoin was too risky for them). Goodbye to your Teachers pensions. other FTX investors: BlackRock, Sequoia, Paradigm, Tiger, Global SoftBank, Circle, and more.
At my talks I frequently say withdraw your funds from exchanges, never keep more on the exchange than you can afford to lose, and stay well diversified. Although I had funds on the exchange, I only had on there what I could afford to lose if it went to zero. Which might be the case now, but let’s hope not.
It is yet to be known if withdrawals will be back up and running, if people will get 100% of their money, a fraction of it, or none.
Time will tell, but one thing I know for certain is that it will be a long road to recovery.
I will keep you updated with more information when I found out…
Other Crypto News:
Bank of England warns the country is entering the longest recession in modern history.
Department of Justice seizes $3.36 billion Bitcoin in connection with the Silk Road fraud, the largest crypto seizure ever.
Santander U.K. has placed £1,000 limit on deposits to Bitcoin exchanges.
Instagram users can now mint NFT directly on Instagram on the Polygon blockchain.
GALA has been exploited. Someone has minted $1 billion worth of Gala tokens TWICE and is dumping
Coinbase COIN reports a net loss of $545 million in Q3 2022
CashApp is censoring Bitcoin transactions to wallets of Cuban residents due to sanctions, a user reports.
Google announces it's running a Solana validator to participate in and validate the network.
ELON MUSK confirms Twitter staff were selling the verified ‘Blue Check’ for up to $15,000 in unauthorized private transactions.
Lebanese are mining Bitcoin and using it to store wealth amid hyper-inflation - CNB
Technical Analysis:
$FTT:
FTT went from $22 yesterday to a low of $2.50, a 90% drop in price. The open interest (amount of open shorts/longs) went up drastically and most people knew it was about to crash when Binance announced their sale of the $FTT tokens. It’s now bottomed around $4.75. Trading FTT now would be more like gambling rather than investing, so I’d recommend staying out of it.
$BTC:
With the cascading crash in FTT, altcoins, and consequently Bitcoin, BTC price has dropped below the June lows and now sits around $17,500. They always say crypto gos up slowly, and down very quickly. 6 months of momentum all erased overnight.
I would let the dust settle and don’t make any bets as it seems the worst is over, but there will likely be a continued bleed out of people looking to sell other coins to have enough money to pay expenses, especially if they have a lot of funds locked in FTX.
That’s all for now friends. Stay diligent and remember protecting your capital is the number one priority. Not your keys, not your coins. Offline storage, hardware wallets and thinking long term. The sun will shine again in crypto one day.
Ashton Addison
-CEO, Crypto Coin Show