Is he Annus horribilis for the cryptocurrency sector. In every sense. And the icing on the cake, which could get even worse, has been the FTX scandal. The exchange, which declared bankruptcy a few weeks ago, has had a shock wave effect that has gone further than expected. The latest have been those of BlockFi, which has also declared bankruptcy, and a Spanish company in the Bit2Me sector, whose plans for a financing round could have been disrupted.
The FTX case had all the ingredients to become a big problem. With a controversial CEO, the first ingredient, the fact is that the accounts of the exchange they were never clear. Little by little, and with a tireless trickle, the problems within the company have been occurring. From liquidity problems, through non-existent account books, to managers targeting the sex life of their employees. Also seasoned with drugs and technology, it is the perfect story. So much so that Amazon has already put the Russo brothers to work on a series on the case.
But as novel as the FTX case may be, its bankruptcy has had more of an effect than might be expected. Especially, taking into account the moment in which it has occurred. And others came before him exchange North American.
Meanwhile, the European Central Bank has taken advantage the situation to strengthen its position in the cryptocurrency sector. First they insist on a historical mantra: they are currencies that are rarely used for legal purposes. Likewise, its operations only feed a state of bubble and speculation. They also add that the regulation defended by the sector could be interpreted as a form of approval of an entire ecosystem with which, to this day, the ECB does not agree.
Those who went before FTX
Celsius Network, dedicated to cryptocurrency lending, already filed for bankruptcy earlier this year. It was one of the first victims of the market crash at the beginning of the year, and one that was to set the tone from then on. A crisis that began in the summer of the previous year, with the massive fall in crypto prices and ending with a blocking of transactions by Cesius and Binance. The latter, who have not yet expressed themselves regarding the latest movements in the sector, managed to save the furniture.
Before Celsius, another fall that kicked off what is now being proposed with FTX. Precisely from the sector that had been feeding the businesses born under the protection of cryptocurrencies. Three Arrows Capital, a popularly known investment firm, declared bankruptcy. An investor in companies in the crypto sector, such as Solana, Axie Infinity or Ethereum, she was unable to overcome the massive fall in the sector and the value of crypto.
In May of this year, one of the most popular and fastest growing stablecoins on the market also came into play. But since everything goes up quickly, it tends to go down at the same speed. UST and Luna, owned by Terra, also declared final bankruptcy. Within hours, both tokens lost 70% of their value compared to the dollar. A problem at all points, since, at least in the case of UST, it aimed to have a stable value backed focused on solving inflation problems in places like Argentina. The point is that this cryptocurrency was an algorithmic stablecoin, supported by another volatile: Luna. When one was blown up, the other inevitably followed.
And now, BlockFi and the Bit2Me effect
It became known this week, BlockFi was the first direct victim of two major events. On the one hand, the cash crisis of the sector in general due to the state of the cryptocurrency world and, on the other, its close relationship with FTX.
BlockFi had a loan, convertible into purchase, of 400 million with FTX. A capital that he needed to deal with creditors and keep his accounts up to date. The bankruptcy of FTX, and the need to repay the agreed loanhas ended up carrying the signature exchange at the end of his life. This same week they announced his bankruptcy.
It is not the only one, however, who could be caught by bankruptcy before the end of the year. Genesis, also an exchange, could announce the process in the coming days. As announced by all the companies in the sector, the FTX case has caught all of its partners by surprise and, like the rest of the planet, they found out about its crisis through social networks.
It has been the effect that the FTX explosion could have had on the Spanish exchange firm par excellence. Bit2Me, a native of Levante in Spain, announced a few days ago through a statement that the state of its liquidity had not suffered any damage. As well as the denial of having carried out any type of collateralized loan or risk activity.
However, liquidity has not been Bit2Me’s problem but its future investments. The firm is in the middle of a financing process in which Telefónica, interested in entering the crypto and NFT sector for a long time, had a majority stake. Bit2Me had never made effective statements about said round, which according to the company would be discussed in the coming weeks. Now, and with the operation still open, it seems that Telefónica would be retracting sails. Precisely to avoid the contagion effect of the crisis that the crypto sector is experiencing.
advanced by The confidential, the operation that had to reach 30 million euros could be reduced due to the outbreak of the FTX crisis and the shock wave that is expected to be even greater in the coming weeks. The Spanish firm, which does not make statements in this regard, maintains that it will soon make announcements regarding what will be one of its largest rounds of financing.
The question that now remains on the table is whether the FTX case will have a greater impact beyond the cases that have already been left by the wayside. As well as the effect it will have on future investments by companies in the crypto sector.
