Crypto News: What is happening in the World of Cryptocurrency … – Forbes

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Published: Jan 17, 2023, 9:00am
Last year’s slew of job cuts throughout the crypto industry came in response to a year of strong headwinds for the space. Despite Bitcoin posting its largest weekly gain in nine months, exchanges are still cutting faster than ever.

Coinbase Global, the largest digital-asset exchange in the US, is cutting 20% of its workforce, or around 950 employees, as the crypto market slump continues. The company’s CEO, Brian Armstrong, announced the layoffs in a blog post, stating that the measures are necessary to survive the industry downturn. 
This is not the first time Coinbase has had to lay off employees, as it already cut 18% of its workforce, about 1200 employees, in June and an additional 60 positions in November. The company will also shut down several projects deemed less likely to be successful. Armstrong acknowledged that this is the first time the crypto market is facing a downturn while the broader economy is also struggling and expressed regret that larger cuts weren’t made earlier.
Coinbase is just one of several exchanges cutting jobs this month. Crypto.com, a leading company in the cryptocurrency exchange, has also announced layoffs due to ongoing economic challenges and unexpected industry events. The exchange will be cutting around 800 staff, equating to about 20% of their workforce, despite previously making cuts in the middle of 2022 in response to the struggling crypto markets. According to the company’s co-founder and CEO, Kris Marszalek, these previous measures did not account for the recent collapse of the FTX exchange, which has further impacted the industry and affected trust in crypto businesses in general.
Luckily for web3, it is not all doom and gloom. Some groups in The Middle East are making moves to put it on the map as a web3 and crypto hotspot. The Venom Foundation, a blockchain platform based in Abu Dhabi, and investment manager Iceberg Capital have teamed up to establish a US$1 billion venture fund for crypto and Web3 companies. The Venom Ventures Fund (VVF) aims to invest in the people, projects and ideas moving the world toward adopting a fairer financial system.
The fund will focus on blockchain technology in payments, Decentralized Finance (DeFi), asset management, and GameFi (a term for blockchain-based games). The VVF plans to use Iceberg Capital’s resources to provide incubation programs and all-encompassing support for selected projects. The fund will reportedly support companies and projects from around the world, not just those based in the Middle East.
The crypto market has recently surged, reaching levels not seen in months after a week-long winning streak. Bitcoin has posted its best week in over nine months, rising almost 13% in the past seven days. It is currently worth $US21,00, according to CoinMarketCap. However, the latest inflation reading in the US suggests that the Federal Reserve’s monetary tightening, a factor that negatively impacted BTC’s price last year, may continue. The US consumer price index (CPI) for December shows a 6.5% increase from 12 months earlier, declining from a pace of 7.1% in November, marking the sixth consecutive month of declining inflation. 
Although it is positive news that CPI data shows inflation is slowing, the decline in US inflation is primarily concentrated in the energy sector, with isolated drops in energy services and fuel. At the same time, prices for food, clothing, and housing have continued to rise substantially month-over-month. This data shows that the apparent slowing of inflation could be skewed by the large drops in energy, suggesting that the Fed’s approach is unlikely to change.
BTC and ETH responded positively to the data. Still, traders should exercise caution as the Fed’s interest rate hike is tipped to be highly likely in February and could continue until the inflation rate drops to more manageable levels.
Since the beginning of the year, the crypto markets have been on a steady grind upwards, starting 2023 with some green on the board for crypto investors. On Sunday, Bitcoin (BTC) broke out of its recent price range and reached a three-week high by convincingly pushing above US$17,000.
Ethereum (ETH) joined in on the break-out, cracking $US1300 for the first time in almost a month. The positive start to the year has created a feeling of cautious enthusiasm among crypto investors, stoking speculation that the bottom is in.
BTC had briefly surpassed $US17,000, however, it took a couple more days for Bitcoin to firmly establish itself above the $17k mark. A primary catalyst for the rally appears to be the reports of a reduction in quality jobs available to Americans and slower wage growth in the US labour market throughout December, despite a stronger than forecasted labour market. This news was seen by traders in both digital asset and traditional markets as a sign that the Federal Reserve may be less aggressive in their attempts to hike interest rates if the economy is showing signs of weakness.
The stock market is showing strong gains, with the Dow Jones Industrial Average and the S&P 500 having their best weeks since November 2022. Investors are buying equities, pushing prices higher on the expectation that the weaker economic data points to the end of the series of aggressive interest rate increases and, hopefully, a loosening of monetary policy by the US Federal Reserve. Investors across both digital asset and traditional markets are awaiting the US Consumer Price Index (CPI) data to be released on January 12 to gauge whether inflation has begun to slow, which would signal the end, or the beginning of the end, of interest rate hikes.
Meanwhile, Investors are closely monitoring the financial situation of the Digital Currency Group (DCG), with concerns that if the company experiences further financial difficulties, it could have a significant negative impact on the cryptocurrency markets. DCG is a prominent player in the cryptocurrency landscape and is the parent company of the Grayscale Bitcoin Trust, which holds 653,633 bitcoins. The US-based venture capital firm, DCG, specialises in the digital currency market, and has several subsidiaries such as CoinDesk, Genesis Trading, and Grayscale Investments (GBTC).
The U.S. Department of Justice’s (DOJ) Eastern District of New York and the U.S. Securities and Exchange Commission (SEC) is reported to be investigating the crypto conglomerate. The agencies are said to be looking into financial transactions between DCG and its subsidiary, Genesis Trading. The prosecutors from the DOJ’s Eastern District of New York office have reportedly requested interviews and documents from both DCG and Genesis, while the SEC is also said to be at an early stage of its own inquiry. Neither company has yet been accused of any illegal activities, but investors remain concerned about the situation
The past year was a rollercoaster for the cryptocurrency markets, with some significant highs and several devastating lows.  The economic conditions leading up to 2022 set the stage for impressive growth in both price and adoption within the cryptocurrency market.
However, challenging macroeconomic conditions put pressure on many projects, leading to catastrophic collapses impacting the entire industry.Since the beginning of the new year, the crypto markets have been on a steady grind upwards, starting 2023 with some green on the board for crypto investors. On Sunday, Bitcoin (BTC) broke out of its recent price range and reached a three-week high by convincingly pushing above US$17,000.
The crypto mania of 2022, largely fuelled by low-interest rates and generous COVID-19 stimulus by governments around the world, has drawn a huge amount of attention to the digital asset market. New cryptocurrency projects were popping up almost daily at the time, and for many, it was hard to determine what was a legitimate investment or not. 
The Terra ecosystem was one such project that gained significant traction throughout 2021 and blazed its way into 2022 with a valuation of over US$60 billion. The project’s USD-pegged stablecoin UST was one of the first examples of an algorithmically pegged stablecoin that had gained significant traction. However, worsening macroeconomic conditions put a strain on the project as prices began to fall in crypto assets, and at the beginning of May, the project collapsed.
The Terra collapse sent shockwaves through the crypto industry, wiping out over US$60 billion overnight. While the project tried to relaunch and return to its former glory, it has been unsuccessful. The founder, Do Kwon, is currently hiding from authorities in relation to the incident. Centralised finance institutions that had lent large sums to hedge funds, such as Three Arrows Capital, found themselves overextended and were hit hard by the sell-off that followed the failure of Terra. Three Arrows Capital and other leveraged hedge funds defaulted on loans from these CeFi companies, which were then forced to file for bankruptcy protection.
User funds held on CeFi platforms were frozen, and retail investors could not withdraw their funds. Companies like Celsius Network and Voyager Digital, which had promised high returns to users, also collapsed, resulting in the loss of user funds. By the end of the second quarter of 2022, the total market capitalisation of cryptocurrencies had fallen by over $1 trillion. The sell-off was exacerbated as leveraged positions were unwound.
By September, the cryptocurrency market appeared to stabilise as investor confidence started to return. Ethereum’s successful transition to proof-of-stake consensus, known as “The Merge”, further boosted confidence levels. This confidence in the cryptocurrency market persisted until November when a CoinDesk article revealed disturbing information about FTX and its sister company Alameda Research.
A frenzy ensued as users rushed to withdraw funds from the exchange, and investors sold off any tokens related to FTX. It was later discovered that FTX was insolvent, having improperly combined customer deposits and funds. The company filed for bankruptcy protection in November, leaving hundreds of thousands of users with deposits locked on the platform, possibly never to be returned. 
It’s important to note that the failures experienced in 2022 were not caused by problems with the underlying blockchain technology. There has been significant technical development in the space this year, and many blockchains have made significant progress. Ethereum successfully underwent its largest-ever upgrade, transitioning from proof-of-work to proof-of-stake, drastically reducing the network’s energy consumption and unlocking a path to further upgrades in the future. 
As we move into 2023, investors should be aware that the current macro environment and the uncertainty of looming regulation from governments globally will present a challenge to the industry. However, the growth of blockchain innovation and the increasing adoption of digital currencies and decentralised finance (DeFi) for various use cases looks promising and should not be overlooked.
2023 will undoubtedly be a challenging year for investors, but those who plan ahead and regularly review their portfolios may be rewarded for their efforts.
Concerns about Binance are growing, with many investors fearing the world’s largest cryptocurrency exchange will soon face the same fate as FTX.
Binance, the world’s biggest cryptocurrency exchange, is under the spotlight after temporarily halting withdrawals of the stablecoin USD Coin (USDC).
Concern about Binance are growing, and customers are withdrawing funds from the exchange at a high rate. In the 24-hour period leading up to Tuesday, $3 billion in net withdrawals flowed out of Binance, according to blockchain analytics firm Nansen.
On December 12, there were reports that US prosecutors could move aggressively against Binance and file criminal charges against several individual executives, including Zhao.
This relates to a long-running case on Binance’s compliance with anti-money laundering laws. The investigation was launched in 2018, and is public knowledge. Then came the suspension of USDC withdrawals on Tuesday.
Given the painful memories of Bankman-Fried’s deception, it is easy to understand the feardespite nothing of substance suggesting that funds are not safe with Binance.
Related: Is Binance In Trouble? 
As FTX’s dodgy dealings continue to unravel overseas and fears loom that Binance is heading towards the same fate, those on Australian shores are becoming increasingly wary—and the Australian government is no exception.
In a media release on Wednesday, Australian Treasurer Jim Chalmers announced the Albanese Government’s 2023 plans to reform and modernise Australia’s financial systems. Included in such plans is to “establish a framework for the licensing and regulation of crypto service providers”.
“The next steps in the Government’s ongoing ‘token mapping’ work will include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers,” Chalmers said in the statement.
Following token mapping and a licensing framework, the Albanese Government will then introduce legislation for the cryptocurrency industry.
The timing of Chalmers’ statement isn’t surprising, as more and more Australians worry about the safety of cryptocurrency investments following recent events of global exchanges such as FTX. And, despite over a month passing since the FTX implosion, there continues to be more to the story.
Sam Bankman-Fried (SBF), FTX’s disgraced ex-CEO was arrested Monday evening after prosecutors in the U.S. alerted the Royal Bahamas Police Force of a sealed indictment. He has been denied bail by Bahamas magistrate judge Joyann Ferguson-Pratt, despite claiming that he needed to take medication such as Zyrtec and Adderall and maintain his vegan diet. The judge also scheduled an extradition hearing on Feb 8th of next year. On Tuesday, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of the indictment against the former CEO.
The charges include wire fraud, conspiracy to commit money laundering and campaign violation allegations. 
It had recently come to light that SBF had been financially backing several media outlets in an alleged attempt to gain favourable coverage of the exchange using a different entity. This revelation has caused many in the industry to question the integrity of these outlets and the validity of their reporting on the exchange. Some are even asking if they should be held partially responsible for users who lost it all.
SBF used a philanthropic entity, “Building a Stronger Future Foundation”, to fund over half a dozen media outlets. While some media outlets disclosed the funding, others did not. Crypto news site “The Block” received over US$27m from FTX’s sister company, Alameda Research, with The Block’s CEO, Michael McCaffery, receiving an additional US$16m loan to assist in buying a property in the Bahamas. Coincidentally, this is also where the headquarters of FTX is located.
The Block’s chief revenue officer, Bobby Moran, took to medium to announce McCaffery’s move to step down from CEO, stating, “I am stepping into that role immediately”. Moran continued, saying that McCaffery’s decision to take the loan from SBF and not disclose the details shows a “serious lack of judgement” and that “it undermines The Block’s reputation and credibility”.
Similar conversations are being had at other publications funded by the tainted exchange and ex-CEO following recent events.
SBF’s arrest in the Bahamas and the subsequent unsealing of the indictment against him have seemingly had a calming effect on the crypto markets. The total market capitalisation broke above US$900 billion for the first time since the beginning of December. Bitcoin and Ethereum posted modest gains of around 3-4%, finishing the week in the green. Bitcoin has reached US$17,400, the highest price since the FTX implosion began to unfold. Crypto markets are also rising as traders and investors expect the US Federal Reserve to slow down on interest rate increases aimed at fighting inflation. 
Over a month after the initial panic, the FTX situation continues to unfold, and it is unknown if the aftermath of the catastrophe has begun to settle. Regulatory pressures still loom, which may lower the markets in the future. The global macroeconomic outlook still appears to have a strong influence on the market; however, for the first time in a month, some life could be coming back into the crypto space.
Swyftx, one of Australia’s leading cryptocurrency exchanges, has recently announced it will lay off 35% of its employees amid a restructuring process. The exchange, launched in 2019, made waves in the Australian exchange industry for its fast and easy-to-use platform. It had quickly become one of the most popular exchanges in the country, with more than 200,000 users and over $60 million in deposits. This large user base was not enough to save it from recent events.
Upon announcing the restructuring, Swyftx co-founder Alex Harper, said in a media release:“Swyftx has no direct exposure to FTX, but we are not immune to the fallout it has caused in the crypto markets”.
However, due to the current crypto bear market and recent FTX implosion rocking the industry, Swyftx has been forced to reduce its staff to ensure its financial security. The firm has said that the cuts are across all departments and that it is working closely with those affected to ensure they are supported.
Swyftx is one of the many centralised crypto exchanges affected by the crypto bear market over the past year. Another popular Australian exchange, Digital Surge, announced it would halt customer deposits and withdrawals following the FTX news. Digital Surge’s co-founders have announced they will put $1 million of their own money towards repaying users rather than taking bankruptcy as the way out.
It appears the trend of troubled exchanges in the wake of recent events is continuing. The massive reduction in crypto trading activity throughout 2022, coupled with the recent catastrophe involving crypto titans FTX and Alameda Research, has strained many businesses in the crypto space.  
Maple Finance, an on-chain under-collateralised crypto lender, has recently issued a default notice to a borrower affected by the FTX situation. Orthogonal Finance had taken out multiple under-collateralised loans from Maple, totalling US$36 million and was also an underwriter of one of the liquidity pools on the platform. However, it recently came to light that Orthogonal had lost a substantial amount of funds to FTX, which was not disclosed to Maple, violating their borrower terms and conditions.
Maple’s bad debt is just another example of the fallout from November continuing to haunt the crypto industry. It is yet to be seen whether further businesses announce they are directly or indirectly affected, but bad news may continue a while longer.
The future of the centralised exchange industry is not certain at this point. The cryptocurrency industry as a whole has faced many challenges over the past year, and many exchanges have struggled with insolvency as a result of the tough conditions. However, as the gateway to crypto for most investors, exchanges remain a key component of the industry and a fresh wave of investors could breathe some life into the crypto space.
The crypto industry is constantly evolving, and those exchanges willing to adapt and innovate while correctly managing customer funds,  should sit in good stead going into the future. Although 2022 has seen a marked decrease in the number of new investors entering the crypto space, the potential for further adoption of cryptocurrencies in the future could lead to a thriving industry.
The once vibrant Solana ecosystem is getting crushed by the FTX and Alameda Implosion. The fall of these crypto titans has sent shockwaves through the crypto industry since the beginning of the month, with victims of the liquidity crisis continuing to surface weeks after the incident. While the entire crypto market has not fared well in the wake of the catastrophe, Solana and Solana-based projects have been affected drastically.
Since Solana’s inception in 2020, FTX and Alameda Research have been tightly intertwined with the project. The pair were staunch supporters of the Solana blockchain and were instrumental in helping the project gain traction in the crypto space. The native token SOL was one of Alameda’s largest holdings, so the ecosystem’s success would have directly impacted Alameda’s portfolio value, explaining the support. 
This connection between the fallen giants and Solana explains why the ecosystem has suffered so badly these past few weeks. Over the course of the FTX and Alameda saga, the price of Solana’s native token, SOL, dropped almost 70%. Large entities like Tether have been moving crypto from the Solana chain onto other chains to reduce their exposure if anything happens to the project. The total value of all assets on the chain has dropped over 70%, falling from just under $US1 billion to just $US280 million in just 20 days.  
On the same day FTX stopped processing withdrawals, Solana processed almost 10 times the usual daily volume. NFT volume also exploded as investors rushed to sell off their digital pictures stored on Solana. This spike in activity was due to investors trying to sell any Solana-based tokens and move their assets onto other chains they deemed to be less risky.
Investing in any cryptocurrency comes with risks, and Solana is no exception. While the low price may seem like a bargain, multiple important factors must be considered before thinking about parting with your hard-earned cash. Alameda’s remaining portfolio balances are a major unknown catalyst for further price falls. There is speculation that Alameda’s holdings of SOL are still valued in the hundreds of millions of dollars. If forced to liquidate their assets, the selling pressure could tank the SOL token’s price even further.
It is also worth considering the long-lasting impact of the situation on Solana users and investors. The fallout from FTX has sparked fear in the hearts of Solana supporters, hence the drastic price drop, total value and activity of the ecosystem. The extent of the damage to investor confidence in Solana over the long term still remains largely unknown. As time goes on, investors may regain confidence and return to the ecosystem, but evidence for this has yet to be seen. 
Before the FTX implosion, the future was looking bright for Solana. The blockchain offered fast and cheap transactions, which was especially appealing to smaller investors, as well as gaming and metaverse projects which required high volumes of transactions. The volume of crypto traded on Solana had also been growing steadily throughout the year despite the overall market downturn, showing that the project had found a product-market fit with certain users. 
Although the future currently looks uncertain for Solana, there is the possibility for the project to rebound if it can get through the FTX implosion. Depending on the outcome, some unknown factors could affect the SOL token price negatively, so investors should consider all the risks before investing. It is never a good idea to dive into a project just because it is “cheap” because, after all, the price has usually fallen for a reason.
The turmoil following the FTX and Alameda implosion has been reflected in the poor performance of crypto markets this past week. Investor confidence is at extremely low levels, with the “Crypto Fear and Greed Index” hovering around the “Extreme Fear” level for the past month. Bitcoin and Ethereum started the week with a fall of 8% and 12%, respectively.
However, despite low buy volume, both assets have rebounded slightly. As of Nov 25, Bitcoin was trading at $16,524.09 while ETH was at $1,187.35, according to CoinMarketCap.
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The FTX and Alameda contagion is still continuing to spread, with several other crypto exchanges and projects facing a liquidity crunch. More exchanges and platforms have now been added to the list of casualties, with Liquid, SALT, Genesis Trading and Gemini all halting trading or withdrawals for some or all accounts. Genesis Trading, a subsidiary of Digital Currency Group, has hinted that bankruptcy could be a possibility if they did not receive help from creditors to resolve their liquidity crisis.
Sister company to Genesis Trading, Grayscale, which manages GBTC, has reported that they are unaffected by the situation. However, the shaky market and the lack of clarity has still put fear into the heart of some investors. The fearful sentiment reflects the level of uncertainty for the future as more and more businesses appear to have been affected. The precarious feeling of the crypto market sheds light on the past week’s poor price performance and gives reason for the lack of demand from crypto investors. 
To make matters worse, the FTX “hacker” who allegedly hacked the FTX platform for around $400 million in users’ cryptocurrency deposits has been selling off huge amounts of stolen coins. Most of the crypto was withdrawn in ETH, with the hacker selling off 50,000 ETH for Bitcoin, worth $60 million. Following this, blockchain data shows the hacker moving 15,000 ETH blocks, worth around $18 million, to different wallets. This has sparked further fears the account will dump even more ETH, driving the price down further. In total, the hacker has 180,000 split across 12 different addresses, and is in the top 40 largest ETH holders.
Despite the market turmoil, many die-hard crypto investors think this could be a great opportunity to purchase digital assets at a discount. However, seasoned investors know that it is never a good idea to try and catch a “falling knife”, and entering the market now comes with extreme risks. It is advisable to think twice before throwing any hard-earned cash at these volatile assets at present.
The state of the crypto market indicates that there could be further downside as more exchanges and businesses in the industry announce their losses from the FTX and Alameda meltdown. Regulators have indicated that regulation is coming to the crypto industry, potentially driving the markets even lower if it is seen as overly harsh. These two unknown factors make “buying the dip” a risky business presently, and the global economic situation does not appear to be helping to drive demand either.
The catastrophic meltdown of crypto titans FTX and Alameda Research has rocked the cryptocurrency world over the past fortnight. The rumour that the pair had blurred the lines between user deposits and their investments soon became a cascade of events that sent shockwaves through the industry. Bitcoin and other cryptocurrencies have been sent into a downward spiral following the implosion, earning November 2022 a place in the history books as one of the worst months in crypto’s history.
But, what really caused the downfall of FTX, what has the impact been and why is Bitcoin falling?
The final quarter of 2021 proved to be the beginning of what has turned out to be a savage downtrend for Bitcoin and crypto markets ever since. Despite reaching an eye-watering US$69,000 almost precisely one year ago, Bitcoin sits nearly 75% down from its record high. The entire cryptocurrency market peaked at a total value of $US3 trillion at around the same time in November of last year but has shed almost $US2.2 billion in value over the past year.
2022 has proven to be a challenging year for investors globally, with both Russia’s invasion of Ukraine and massive fiscal stimulus by governments during Covid-19 lockdowns, causing high inflation for countries worldwide. To drive down the inflation rate to acceptable levels, central banks have raised interest rates, negatively impacting investment markets, such as stocks and crypto.
Since the start of the year, cryptocurrencies across the board have generally trended downward in value, exposing vulnerabilities for some players in the industry. The Terra Luna collapse in May caused significant fallout for the entire crypto space, wiping out almost $US60 billion from the crypto markets in a matter of days. Numerous companies were directly affected; most notably, Celsius, Voyager and 3 Arrows Capital filed for bankruptcy following the incident.
By October, the crypto markets had finally begun to shake the dust off from the Terra collapse, and the space seemed to be moving in a positive direction. However, on November 2nd 2022, CoinDesk ended the brief moment of tranquillity by revealing that giants FTX and Alameda Research appeared to have put themselves in a risky position. A cascade of events soon followed, creating mass hysteria in the world of crypto and tanking the price of Bitcoin as investors panic-sold their assets to rescue any money they had left.
Sam Bankman-Fried, more commonly known as SBF, is a crypto mogul known for founding exchange giant FTX and quantitative trading firm, Alameda Research. CoinDesk revealed that while Alameda Research and FTX were supposedly separate companies, the balance sheets of these companies had become intertwined. The holdings of Alameda Research were dominated by FTX’s token, denoted by the ticker symbol FTT.
Several days after this information surfaced, a rival exchange and investor in FTX, Binance, announced they would sell all remaining FTT holdings, amounting to $US580 million. Naturally, the price of the FTT token plummeted following the news. This price drop caused immediate panic among FTX users, and a ‘bank run’ on the exchange ensued. After only $US4.5 billion in crypto assets had been removed from the FTX platform, withdrawals stopped being processed without warning.
This situation left $US10 billion of user funds trapped on the exchange, potentially affecting millions of users. Fearing the worst, some affected crypto investors began selling whatever assets they had remaining to get out of the market, causing a rapid fall in Bitcoin and cryptocurrencies across the board. Rival exchange Binance briefly stepped in, offering to buy out FTX and fulfil their liabilities; however, after less than a day of due diligence, they announced the issues were beyond their “ability to help”.
After this, Chinese crypto-mogul and founder of TRON, Justin Sun, offered to back any FTX deposits of TRON-based tokens. Seeing a way out, users instantly flocked to buy the Sun-backed tokens and withdraw, pushing the price up on the platform by almost 50 times the original. Of course, when withdrawn, this meant taking an immediate loss of up to 99%. Many FTX users decided that taking this loss was better than leaving assets on the exchange.
FTX has since filed for bankruptcy, both in Australia and overseas, suffered an alleged hack for almost $US1 billion in user funds, and is now being investigated by the Bahamian Government for criminal misconduct. Quite the downfall indeed.
The collapse of SBF’s empire has widespread consequences for the crypto industry. FTX and Alameda Research were seen as industry powerhouses and had investments or liabilities with many companies in the space. Other companies affected by the FTX collapse have already started coming forward, pausing user withdrawals from the platform while they determine the extent of the damage.
Aside from the direct impact of FTX’s dealings with other companies, there has also been a degree of mass hysteria and panic. Some crypto investors have all but lost faith in centralised platforms and exchanges, and are frantically withdrawing every penny they can from their accounts. Massive outflows from exchanges show the extent of this loss of trust, with over $US3.7 billion worth of Bitcoin being removed from exchanges, along with billions of dollars in other currencies.
Some users may have been so shaken by the disaster that they may decide to sell their assets and leave the crypto space entirely. The plunge in prices across many crypto assets suggests this could be a distinct possibility and could be one of the reasons why Bitcoin is falling. However, despite the negative impacts of the past week, there are some positive takeaways.
A key takeaway will be the need for improved regulation for centralised crypto exchanges to ensure the proper management of users’ funds. SBF was presenting the case to regulators that proposed a light touch, benefitting FTX and most severely affecting rivals and decentralised financial applications.
Another critical realisation for crypto investors is that centralised platforms are not necessarily the safest places to store crypto: those who chose to keep their crypto assets in their wallets were unaffected by the past week’s events and still have access to their cryptocurrencies. Some may be so scarred by FTX’s collapse that they opt for this storage method in the future. In any case, watch this space.
This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency as an investment class.

Patrick McGimpsey is a freelance writer passionate about crypto and its impact on the financial world. Currently working as the content lead for Australian startup CryptoTaxCalculator, Patrick has also covered the crypto industry for Canstar and The Chainsaw. Patrick has over seven years of experience in the crypto space and has previously shared his knowledge with the AML and fraud departments of Australian financial Institutions.

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