It seems like a fundamental flaw in their business model rather than a market downturn.
This seems like a bigger deal to me because FTX is part of then new wave of crypto companies that were supposed to be legitimising crypto. And even they can't stay afloat. It's just a matter of time before the next crypto giant falls.
Wow, that's crazy. FTX was the company that saved a lot of crypto companies that were about to default on their liabilities in the first stages of crypto winter. And now they are the one that are going under. Ironic.
I can't speak about FTX the company, because I just don't know their business.
I am speaking about crypto in general.
From what I have seen a lot of companies popped up that are purely bound to crypto and so almost all of them will fall when crypto falls. Only very small minority have enough business footprint outside of crypto or will be able to pivot in time to avoid demise if it happens.
FTX was an exchange for Cryptos. No problems there. They also offered a coin of their own. Also, no problems.
But then they borrowed a bunch of money against the value of their coin. Fundamentally not good, because it means they now owe customers more money than the customers put in.
There was also a trading house that they ran on their own exchange, a competitor who might have triggered the collapse as a prank (Binance), and an over exuberant owner who always seemed to be above this sort of mess.
Honestly, I think FTX is biting off way more than they can chew. They’re really well-connected for the crypto industry, knifing them will definitely get the attention of regulators and that could blow up the entire thing. Their only real asset is being perceived as too big to fail but they’re not exactly acting in ways that endears them to the federal government
Well, FTX is unique in the crypto space in that there has never been a loss of funds anywhere near the magnitude of this debacle.
Odd to me that anyone would look at a company that managed to lose billions of customer and investor dollars under extremely suspicious circumstances, and then react dismissively to credible allegations of fraud by framing it as an attempt to "heap scorn".
Interesting, I guess FTX is really in it to save the ecosystem but not sure the value for an investor (unless their portfolio is all crypto projects) to bail them out.
I am unsure if you are knowledgable about the situation with FTX given your comments. However, I do want to hear your opinion. Could you share what was broken about crypto in this FTX case?
To be fair, FTX isn't a result of crypto being unregulated. Operating an exchange is regulated to some extent, but this is a story of failed corporate governance amongst many other things.
FTX is also going to feel a lot of pain when the crypto market crash completes. None of these companies are IMO sustainable without mass interest in cryptocurrencies, which is rapidly fading as people realise they're not going to get rich quick.
I mean really it seems like FTX’s issue is that it got raided to serve as a hedge funds piggy bank. They’re not stupid, they wouldn’t accept such a massive amount of collateral in their own token if it wasn’t mostly owned by their hedge fund that they want to funnel assets too.
This seems like a bigger deal to me because FTX is part of then new wave of crypto companies that were supposed to be legitimising crypto. And even they can't stay afloat. It's just a matter of time before the next crypto giant falls.
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