The collapse of the crypto exchange FTX over the past week is still impacting the cryptocurrency world, with the fallout now casting shadows over BlockFi, Voyager Digital and Crypto.com.
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FTX Fallout Continues, Ethereum Co-Founder Weighs In
The contagion impacts from the recent rapid implosion of one of the world’s largest cryptocurrency exchanges, FTX, are still being felt across the decentralised finance world. As we have featured in numerous reports over the past week, the “King of Crypto,” Sam Bankman-Fried, has seen his empire crumble in a week, FTX faced liquidity issues, which have meant that creditors and FTX clients may not see their funds again. Bahamas-based FTX has filed for bankruptcy, and US and Bahamian authorities are investigating the cryptocurrency exchange, including from the US, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DoJ).
Ethereum co-founder, Vitalik Buterin, has weighed in with his own thoughts on the FTX implosion and personally about Bankman-Fried. Last week in Buenos Aires, Argentina, at the LaBitConf conference, he stated that people were interested in the FTX marketing and the “personalistic style” similar to that of “1930s dictators,” which is the “exact opposite of every ethos of crypto projects that try to be decentralized.” But in a tweet over the past 24 hours he has also stated, “Automatically downgrading every single thing SBF believed in is an error, It's important to actually think and figure out which things contributed to the fraud and which things didn't.” Adding, “Don't be the guy who would have tried to cancel vegetarianism in 1945.”
BlockFi and Voyager Digital Latest Casualties
According to the Wall Street Journal, the contagion from the collapse of FTX is threatening the future of crypto lenders like BlockFi and Voyager Digital. BlockFi halted withdrawals last week and, in a blog post earlier this week, stated, “we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com.”
Voyager, the bankrupt crypto lender has been required to attempt to find a replacement buyer after FTX wouldn’t be able to buy the company as planned. During a court hearing on Tuesday, Voyager’s main bankruptcy attorney, Joshua Sussberg, stated, “I don’t think we’ve seen the end of the contagion factor or the fear that is running through the market.”
Crypto.com in the Spotlight
Another huge cryptocurrency exchange, Crypto.com, has been in the spotlight too recently after mistakenly sending $400 million worth of Ether to Gate.io in October. This mistake raised concerns amongst Crypto.com clients that their funds could be at risk. But in a YouTube video Q&A this week, the CEO of Crypto.com, Kris Marszalek, stated that Crypto.com had a “tremendously strong balance sheet,” adding, “We never engage as a company in any irresponsible lending practices, we never took any third-party risks,” alluding to the kinds of practices that caused the collapse of FTX.
