Solana falls 55% in week, bankrupt FTX called upon Coinbase, Kraken and Binance for help, everyone refused

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Last Updated on 12 November 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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The crypto market is reeling from the scandal surrounding FTX. Another token that could now be in trouble is Solana, which lost more than half its value in the past week. It even emerged that crypto platform Crypto.com holds some 20% of it’s assets in Shiba Inu, the highly volatile memecoin.

Then again, although crypto is down and engulfed in another scandal thanks to FTX and the demise of Sam Bankman-Fried (he declared bankruptcy yesterday), there are also positives emerging from this past week.

For one, the call for crypto regulation will now become bigger than ever. Secondly, there only remain four major (more than 500 billion in trading volume year to date) crypto exchanges at this point: OKX, UpBit, Coinbase and Binance. They will have to guarantee depositor funds for the sake of the cryptosphere. In the past day, both Brian Armstrong (Coinbase) and Changpeng Zhao (Binance) have done so.

Advertentie.

SOS

When FTX got into trouble because of a news story last week that showed how intertwined trading firm Alameda research and FTX were, CEO Sam Bankman-Fried at first called upon Binance CEO Changpeng Zhao for help. CZ looked at the balance sheet and after due diligence decided not to invest. Now that the hole in FTX’s finances becomes apparent, probably a good choice.

It appears that Bankman-Fried also called upon Coinbase for possible help, as the biggest US crypto platform’s CEO, Brian Armstrong confirmed in an interview with CNBC on Thursday. He said:

It quickly became apparent to me that this wasn’t the type of asset that we would invest in if it was actually that far underwater and if there had actually been either fraud or just misrepresentation to either customers or investors.

I was basically reading the room, and it felt like a pretty bad situation that we wanted to stay away from.

$6 billion

In fact, FTX seemed to have been hit with what can only be described as a bank run. When news came out that some of Alameda Research’s funds were basically guaranteed by the value of FTX’s coin, FTT, the latter began to tumble and the whole house of cards started falling down.

It has now become apparent that investors withdrew $6 billion from the FTX platform in two days over fears of a cryptocurrency meltdown. This in turn created a liquidity crunch for the company and left Bankman-Fried holding an empty bag.

Axios even reported that Bankman-Fried also approached smaller rival cryptocurrency exchange Kraken for help avoiding bankruptcy. Problem was that whoever looked at the books knew that there was no reason to bail out a bankrupt company.

Armstrong claims he felt “duped” by Sam Bankman-Fried after revelations of how FTX reportedly misused funds to prop up other companies.

I look back at all the interactions that I had with Sam, and I felt like he was very bright and genuine, and an eager person. Perhaps a bit young, perhaps a bit reckless in certain moments but not corrupt, and. Again, I hate to use that word because we don’t know exactly what happened. Sometimes people get in over their heads, or misunderstandings happen.

Armstrong said.