In the wake of the FTX collapse, the ripple effect has been felt throughout the crypto community. New facts have come to light as more crypto firms have confirmed some form of exposure to FTX. The crypto community has stood united, digging for facts. The trust in centralized entities has waned, some have called it the worst week in cryptocurrency history. A new call for centralized exchanges (CEX) to prove their asset base – mainly via proof-of-reserves with Merkle tree – has gained so much popularity.
Who Has Been Exposed to FTX?
As days go by, crypto firms who were initially silent about their exposure to FTX have begun to reveal new details. BlockFi, Celsius Network, Coinbase, Crypto.com, Galois Capital, Genesis Trading, Silvergate Capital, and Voyager Digital, among others, have revealed exposure to FTX.
BlockFi is Halting Operations
Cryptocurrency lending platform BlockFi has said it had significant exposure to FTX. BlockFi has paused withdrawals on its platform. Just a few days ago, BlockFi announced that it was caught aback by the FTX collapse. In the latest news, BlockFi is preparing to file for Chapter 11 bankruptcy protection. In July, BlockFi signed a $400 million credit facility deal with FTX; this is the cause of its significant exposure to FTX. BlockFi has also announced plans to lay off a significant number of its staff. BlockFi sent a notice to its clients on November 14 in which it stated that the rumours that a majority of its assets are custodied at FTX are false; however, it admitted to having significant exposure to FTX. BlockFi also informed customers that withdrawals remain paused on its platform and no deposits should be made to a BlockFi Wallet or Interest Account.
SALT Lending Loses its Savour
SALT seems to be the next domino to fall in the FTX fiasco. SALT has admitted exposure to FTX and has paused deposits and withdrawals. In a message to its clients, SALT Lending said the collapse of FTX had impacted its business. It said during the time of suspended deposits and withdrawals, loans will remain active and all loan monitoring systems will remain operational. SALT is a crypto lending platform which launched jn 2018, allowing its users to take collateralized crypto loans.
SALT Lending’s announcement of exposure to FTX also cost it an acquisition deal. In the wake of the FTX collapse and its spiral effects on SALT, the online investing platform Bnk To The Future announced the termination of its Letter of Intent (LOI) with SALT. Bnk To The Future said it terminated its previously announced Letter of Intent with SALT due to SALT’s position with FTX and for failing Bnk To The Future’s due diligence.
Genesis’ Crypto-Lending Arm Halts Withdrawal
Genesis Global Trading has said its crypto-lending unit known as Genesis Global Capital is temporarily suspending redemptions and new loans. Genesis says it is finding a solution to the current challenges faced by its lending unit and is seeking a source of new liquidity. Genesis says its spot and derivatives trading and custody businesses remain fully functional.
Genesis says it has hired the best advisors in the industry to explore all possible options; a plan for its lending business will be delivered next week.
Who Else is Affected by the FTX Collapse?
Celsius Network has said in a tweet that it had 3.5 million Serum tokens (SRM) on FTX as well as around $13 million in loans to FTX’s trading company Alameda Research. Previously bankrupt Celsius Network received a bid from FTX to purchase the assets of the lending company.
Crypto trading giant Coinbase has also said in a blog post that it has $15 million worth of deposits on FTX. Coinbase, however, maintained that it had no direct exposure to FTX, Alameda Research, and Genesis Trading. Coinbase says it holds customers’ assets one-for-one, and any institutional lending activity on its platform is at the discretion of the customer and backed by collateral.
Coinshare has said in a press release that it has $30.3 million worth of exposure to FTX, which included 190 BTC, 1,000 ETH, $25.9 million USDC, and $110,000 of other assets
Users Moving to Cold Crypto Storage
The FTX collapse has served as a reminder to the crypto community that there are higher risks with centralized entities holding custody of digital assets. As the popular crypto cliché goes “not your keys, not your coins.” One of the safest ways to store crypto is on hardware wallets. One of the most popular crypto hardware wallets Trezor said it has seen a 300% surge in sales revenue since the FTX crash and its related events started. Ledger, another leading maker of hardware wallets, has also confirmed an increase in hardware wallet sales.
Who has Been Reporting Accurately?
The crypto community on Twitter is fond of analysing crypto-related events using on-chain data. In the wake of the FTX fiasco, the community has come together stronger. Using blockchain analytics, crypto Twitter has broken every bit of the FTX story. Citizens journalism has been provided by the community. This form of journalism has been praised by exchange leads. Coinbase CEO Brian Armstrong has praised the crypto community on Twitter. He said it feels like a turning point for citizen journalism and a loss of trust in mainstream media (MSM).
Where is Sam Bankman-Fried?
It is rumored that Sam Bankman-Fried (SBF) is currently in the Bahamas, and the US authorities are in touch with the Bahamian authorities to extradite the FTX founder to the US, to face the charges that have been leveled against him. SBF has kept on releasing tweets related to the collapse of his firm. The Bahamas Police force said in a tweet that a team of financial investigators from its Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred in light of the collapse of FTX.
U.S. House Financial Services Committee to Hold Hearing on FTX
The US House committee plans to hold a hearing in December to investigate the collapse of FTX. Rep. Maxine Waters (D-Calif.) and Rep. Patrick McHenry (R-N.C.), the chair and ranking member of the committee respectively, said in a statement that the lawmakers would want to hear about the collapse of the crypto exchange and its “broader consequences” for the cryptocurrency ecosystem.
There are expected to be testimonies from Sam-Bankman Fried. Representatives from FTX, Alameda research and Binance are also expected to testify in the hearing.