The last week has not been kind to the crypto space, thanks to the FTX blowout and subsequent bankruptcy filing last Friday. Things are only going to get worse for its now former CEO, Sam Bankman-Fried as more information is known, the 170 or so subsidiaries he created with FTX customer funds, one of which, Alameda Research, was used to pump up FTX's own cryptocurrency FTT before listing it on their own exchange. I'm picking up hints there was some serious money laundering going on, so expect this to blow up further and soon.
It's really shocking to see a company with a valuation of $32 Billion last Monday collapse and file for bankruptcy by the end of the week. Not surprisingly, this sent a shock wave across cryptoland.
Bitcoin saw its price tumble almost $5,000 in a matter of days to a low of $15,820 on Tuesday, exactly one week ago. In the last 24 hours, Bitcoin saw a high of $17,091 and a low of $16,509, according to Bitcoinprice.com and at time of writing, sits at $16,949, an increase of $357.
There was another token that suffered a bloodbath in the last week. Kitco News reports that the CRO utility token (or Cronos / Crypto.com's native token) suffered a near 50% loss in the previous 7 days, down to a low of just under 7 cents. One year ago, CRO was valued at 89.1 cents. The drop since then represents an approximate 93% loss in value.
Naturally, the drop of the last week is related to the FTX fiasco but something else happened that caused jitters among Crypto.com customers as they noticed $347 million of the company's stake in Ether 'moving back and forth on-chain'. Some 285,000 ETH was sent to Gate.io, another exchange, from Crypto.com's wallet address and sent back again. CEO Kris Marszalek explained this was done in error and was meant to be sent to a cold storage wallet. They worked with the Gate team and the tokens have since been returned.
With FTX's collapse, Crypto.com is now the 17th largest exchange and like other exchanges, has scrambled to prove it is sufficiently funded with actual reserves, including more than 53,000 Bitcoin and some 391,000 Ether for total assets of about $3 billion. Marszalek assured investors yesterday that its token was never used as collateral for loans, unlike FTX.
The Kitco article goes on to explain that Binance CEO Changpeng (CZ) Zhao also held a meeting yesterday. He stated that smaller exchanges rely on each other or Binance for liquidity but because Binance is the largest liquidity pool on the planet and thus does not rely on smaller exchanges for liquidity, all user funds stay on the platform. He also stated, " If an exchange has to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away", likely referring to Crypto.com's ETH moves.
Zhao should know. He cashed out some $535 mllion in FTT a week, on Tuesday, just before FTX suddenly collapsed and after FTX had reached out to Binance for a bailout. Now we understand more clearly that after seeing the books, Zhao realized the schemes being perpetrated by Bankman-Fried and company. Instead of bailing them out, he bailed on them and voila! We have our new Lehman / WorldCom / Enron moment.
With some 12,000 tokens circulating out there, it's highly likely we're going to see more collapses and bankruptcies. According to the Motley Fool, cryptos more than doubled from 2021 to 2022 and by the end of 2021, one thousand new crytocurrencies were being added every month! They also add that many new cryptocurrencies have little purpose other than making money for their developers.
In other words, exercise due diligence when investing in cryptos!
Another thing I noticed from the last week... the Canadian dollar jumped almost 4 cents against the USD before coming down 2 cents and is holding steady at about 75.2 cents USD while the USD, which peaked at 114 on September 27 is down to 106.2 at time of writing. Gold and silver appear to be the winners this time around...
According to an article posted by Kitco on Friday, gold has posted the best week in 2 years!
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A fan of history? Check out my other blog, 'A Brief History Of'.
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That time Nicola Tesla tore up a contract worth $$$ billions.
