For the cryptocurrency market, the fall of the FTX exchange may represent the same moment as the collapse of Lehman Brothers for the world of traditional investments. The whole system may collapse, resembling the proverbial house of cards. Who will survive and who is the collapse almost inevitable?
US brokerage Genesis, which deals in digital assets, has halted withdrawals in its credit division. After the collapse of the FTX crypto exchange, which sent shockwaves through the entire cryptocurrency industry, the Genesis was experiencing an “extraordinary volume of withdrawal requests”. Bloomberg reported about it. On the Crypto exchange BlockFi is preparing for possible bankruptcy due to its “significant exposure” to FTX, wrote The Wall Street Journal (WSJ). The firm had also previously stopped withdrawals. The founder of FTX in the US was sued by clients of the crypto exchange. American Secretary Janet Yellen therefore called for the regulation of the cryptocurrency industry.
The fall of the FTX crypto exchange will lead to a tightening of the rules for Bitcoin et al.
The collapse of the empire of only thirty-year-old Sam Bankman-Fried deprived millions of people of considerable funds, and the fall of the FTX crypto exchange took hundreds of millions of dollars from the entire cryptocurrency market. Important institutions, especially in the US and the European Union, have been watching the situation from afar, and they will now begin to press for the final determination of the rules for crypto-assets, according to the Bloomberg agency.
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Thus, Genesis clients cannot now exchange their digital assets for cash and will not receive a new loan. Withdrawal requests have exceeded current liquidity at Genesis Global Capital’s lending division, according to the firm’s interim chief, Derar Islam. The firm has hired advisers to explore all possible solutions to the situation, including obtaining new financing. The company will present a plan for its lending business next week, Islim said.
According to him, the suspension of withdrawals will only affect credit activities. Islim elaborated that trading and assets and their custody “remain fully functional”.
A domino effect
The sudden collapse of FTX is spreading like wildfire through the cryptocurrency industry, with distraught clients scrambling to withdraw their assets from other platforms. The financial health of Genesis was a barometer for the entire industry, Bloomberg reported. The company is one of the oldest and best-known cryptocurrency brokers, which offers professional investors, in addition to trading, the safekeeping of digital assets. In the past few years, it has also established itself as one of the largest cryptocurrency loan providers.
Lukáš Kovanda: Bitcoin will definitely withstand the fall of another “shitcoin”.
The crash of the FTX crypto exchange is not the crash of Bitcoin. It only proves the problematic nature of its imitations, or “shitcoins”, comments Lukáš Kovanda, chief economist of Trinity Bank, on the cryptocurrency market.
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BlockFi has denied reports that it holds most of its assets with FTX. However, on Monday, the firm admitted that in addition to platform deposits, it has an undrawn line of credit with FTX and that FTX has outstanding obligations to BlockFi. BlockFi has not yet commented on the news of the bankruptcy proposal.
Several companies in the industry, such as the Tether platform and crypto exchanges Crypto.com, Coinbase and Binance, have issued statements that they have no exposure to Genesis. The founder of the crypto exchange Binance said that it is considering the acquisition of the Genesis loan portfolio.
An $11 billion scam?
FTX filed for bankruptcy protection in the United States last Friday. The company is based in the Bahamas, and its Bahamian liquidators challenged the validity of the American bankruptcy proceedings in a US court today. A Bahamian court awarded them the liquidation of the company last Thursday, so the Bahamian liquidators claim that they are the only ones authorized to initiate bankruptcy proceedings against FTX and its affiliates.
Crypto is taking off in a big way in the Czech Republic. Now comes regulation, says cryptocurrency legal expert
Cryptocurrency rates have been plummeting in recent days and many people are predicting their end. Nevertheless, assets such as bitcoin or ether will almost certainly remain here, because sufficient infrastructure has already been built around them, including the possibility to pay with them. This is exactly what the GoCrypto company offers in the Czech Republic, which hundreds of local merchants have in their Global Payments terminals. They can accept the cryptocurrency and then choose whether they want crowns or keep bitcoin for example. At the same time, the Czech Central Bank does not recognize bitcoins as currency. “The CNB behaves completely correctly. We talk to them, they do not hinder us in any way. In addition, from 2024, legislation will operate in all EU countries that will finally level the playing field for everyone and define how cryptoassets are actually perceived here,” says Luka Planinc, GoCrypto lawyer and leading expert on crypto-legislation.
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FTX founder Sam Bankman-Fried faces class-action lawsuit in Miami court. The plaintiffs allege that the accounts with FTX, from which the firm promised returns, were not registered with the Securities and Exchange Commission (SEC), and therefore the offering of the product did not comply with Florida law.
After the collapse of the FTX crypto exchange, according to the lawsuit, American investors lost 11 billion dollars (257.8 billion crowns). Bankman-Fried and a number of celebrities who helped promote FTX, such as American football star Tom Brady and tennis player Naomi Osaka, are seeking compensation.
The US House Financial Services Committee said today that it plans to hold hearings in December to investigate the FTX collapse. The committee informed that it wants to hear from participating companies and individuals, including FTX founder Sam Bankman-Fried and representatives of other companies, such as Alameda Research and Binance.
Panic on the cryptocurrency market continues for the third day, Bitcoin falls to 13 thousand dollars
Cryptocurrencies have weakened significantly for the third day in a row. Cryptocurrency exchange Binance announced on Wednesday that it has decided to back out of its planned takeover of rival FTX. The latter ran into financial problems, which undermines the stability of the entire cryptocurrency market. According to Reuters and Bloomberg sources, the US Securities and Exchange Commission (SEC) and the US Department of Justice are investigating the case. Bitcoin, the largest cryptocurrency, is trying to recover from a two-year low.
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Trader’s week: Stocks surge, investors bet against further rate hikes
American stocks went through another turbulent week, where daily movements were often at the level of hundreds of points. The market is meeting the reality of higher rates and a shrinking economy with the desire for the Fed to slow down its aggressive monetary policy of rate hikes. A significant part of the market still tends to bet on a so-called pivot, or a pause in rate hikes. This may paradoxically trigger another sell-off.
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All about inflation
Inflation scarecrow. What causes it? How to defend against her? How to invest, where to save savings, where there are decent interest rates, which bonds are worth it? How do the state, the government and the CNB fight inflation? Who and why increases the price and how much? How to cope with price increases? Is it the right time to get a mortgage, will interest rates rise or fall, and for what reason? Context, tips, hints, warnings.
High inflation troubles not only the Czechia, but also other European countries and the United States. See the overview in the world.