FTX meltdown sparks investor rethink of battered crypto market
NEW YORK/LONDON: A week of turmoil culminating in major crypto exchange FTX filing for bankruptcy has left investors questioning the viability of a sector already bruised by the bitcoin bubble bursting and closures of key market players.The collapse of several crypto lenders, including Celsius and Voyager, major tokens terraUSD and Luna, and hedge fund Three Arrows Capital, had rung alarm bells even before the blow-up of FTX, headed by Sam Bankman-Fried.Crypto markets have also come under intense pressure this year as rising interest rates prompted investors to ditch riskier assets.
FTX filed US bankruptcy proceedings on Friday (Nov 11) and Bankman-Fried stepped down as chief executive officer after a rapid liquidity crunch at the group left FTX scrambling to raise about US$9.4 billion from investors and rivals.Top cryptocurrency bitcoin was trading at about US$16,946, down 3.5 per cent on Friday and had dropped below US$16,000 for the first time in two years on Wednesday when rival exchange Binance abandoned a rescue for FTX."The fallout from FTX isn't something that'll be resolved in hours," said Antoni Trenchev, co-founder of crypto lender Nexo."This will remain a dark cloud over the industry and institutions will stay away until the dust settles."Knock-on effects are already rippling through the crypto industry.
Crypto lender BlockFi early on Friday said it was pausing client withdrawals until there was clarity on FTX.FTX's swift fall from grace followed heavy speculation about its financial health that triggered US$6 billion of withdrawals in just 72 hours earlier this week.
The company had published a valuation of US$32 billion as recently as January."From a financial side, it's fair to say that confidence is going
