The fall in the cryptocurrency market seems to have no end, at least in the short term, as there is increasing uncertainty regarding the bankruptcy of FTX, one of the exchanges with the highest volume in the world. The controversy continues, investors continue to close positions and the environment is not looking good.
Next, we will tell you the most relevant events of the week regarding the situation of FTX and the rest of the most important news on the cryptocurrency market.
As we were able to analyze in last week’s blog, the current situation in the cryptocurrency market is increasingly complicated, not only because of the macroeconomic environment and the economic recession that has led crypto assets to lose more than 70%. of its value so far this year, but also due to the bankruptcy of one of the largest and most important exchanges in the world, FTX. Let us remember that a series of mismanagement has led the exchange to present a strong liquidity crisis, which finally triggered the company founded by Sam Bankman Fried declaring bankruptcy.
The novel continues, and it is that a couple of days ago it was revealed that the authorities in The Bahamas, where FTX has its headquarters, were investigating possible criminal conduct related to the implosion of the company. The government of the Bahamas jumped into action after FTX declared that it was investigating a possible theft or hack, through which, according to the firm Elliptic, about $473 million in crypto assets could have been taken from the exchange. This alleged hacker would have moved part of the money, changing it to Ether. With this, it became one of the largest whales in Ethereum. By November 20, new movements were detected, and this person is said to have now been exchanging that same Ether for wBTC and RenBTC, according to network records. Some sources believe they have identified the author of the transactions.
Following this, a couple of days later, the Bahamas Securities and Exchange Commission took control over FTX’s assets in the country, keeping them in a digital wallet under its custody. The institution mentioned that this was possible since the company registered in the Bahamas by FTX, FTX Digital Markets, is not part of the ongoing bankruptcy filing in the United States. The company is now under investigation by the financial crimes division of the Bahamas police, while Sam Bankman-Fried, the company’s former CEO, was requested by US authorities for an interrogation.
As if that were not enough, some of those in charge of liquidating the FTX funds presented their findings through court documents. It has been pointed out before a United States Bankruptcy Court that the information found in the balance sheets pointed to a rather serious fraud. What will happen to Sam Bankman-Fried? Will this be the “Lehman Brothers” of cryptocurrencies?
In other news, last week Changpeng Zhao, CEO of Binance, declared at the B20 Summit in Indonesia that he plans to help establish a global cryptocurrency association, seeking to establish very strong standards for the industry. Also, via Twitter, Zhao mentioned that he plans to set up a recovery fund to help projects that are short of cash but have a strong business case. As if that were not enough, he encouraged the projects to contact Binance Labs, the exchange’s investment and incubator unit, in order to develop optimally, seeking to support the development of the ecosystem in these difficult times.
Days later, Zhao announced that he would be setting up a recovery fund to help people who have been affected by recent events, saying the sector will be fine, seeking to boost optimism among investors. Zhao told CNBC that they want the industry’s strongest to protect the “good players,” referring to retailers that could be hurt in the short term. However, an exact figure for the size of the recovery fund has not yet been specified.
Nayib and El Salvador return to the ring! Nayib Bukele, president of El Salvador, published last Wednesday on his Twitter account that the government of the Central American country will buy a daily Bitcoin. In addition, after the fall of FTX, he had mentioned that this exchange was “the complete opposite of the spirit of Bitcoin”, which shows his optimistic position towards crypto assets. The tweet had various reactions from important people within the ecosystem, including the founder of Tron, Justin Sun, who sympathized with the president’s position and also said that he would do the same. It should be noted that El Salvador has so far 2,381 bitcoins, and that the last time they bought was on July 1 of this year.
Controversies continue! Two Estonian citizens have been arrested and charged in connection with what US prosecutors have described as a money laundering and cryptocurrency fraud scheme in the amount of around $575 million. Sergei Potapenko and Ivan Turõgin are being accused of defrauding hundreds of thousands of victims, according to the US Department of Justice. The defendants allegedly induced victims to enter into fraudulent equipment rental agreements with their crypto mining service, known as HashFlare. In addition, they are also being accused of soliciting investments in a crypto-asset bank called Polybius Bank, which prosecutors say was not a bank and did not pay promised dividends.
Bitcoin is just above $16,000, having breached a critical support level near $17,110. With this, it confirms a new bearish breakout, which could lead the world’s largest cryptocurrency to go in free fall to $12,500.
BTC/USDT 1D (TradingView Chart).
For its part, Ethereum is trading above $1,100, and is approaching a critical level near $1,000. Having a fairly high correlation with Bitcoin, it can be concluded that it is quite likely that the most important smart contract platform in the ecosystem could trade below 4 digits again, as it did just a couple of months ago.
ETH/USDT 1D (TradingView Chart).
The FTX case was undoubtedly a strong shock to the crypto asset market, and just as it happened with the Terra case, we have seen and are about to see strong repercussions in the market. Although this has called into question its credibility before a large number of investors, we can see how projects and companies are beginning to filter into the ecosystem, in which those with a serious structure and well managed survive. There is no doubt that nobody expected FTX to be one of those projects that fell, but it does serve as a lesson and a watershed for the implementation of ecosystem regulations, which sooner or later must be consolidated so that crypto assets and governments can coexist harmoniously. Without further ado, we wish you an amazing week.
