Overview
Binance pulls out of the FTX deal.
Markets: Solana (SOL) leads the plummet.
Binance vows a Proof-Of-Reserve pledge; others follow.
NEXO dodges an FTX bullet.
Elon Musk says Twitter will do “dumb things”.
"Failures of opaque, centralized corporations are as old and common as corporations themselves. This wasn't a crypto collapse. This was a tradfi/corporate collapse.
We lean into DeFi now.
And we do it with fire in the veins” ✊
Good morning Banter Fam,
In a week focused on US midterm elections and November’s Core Inflation Index (CPI) release, the FTX collapse has rightfully taken center stage.
Binance, considering an acquisition of FTX, took one look at the balance and had a sudden change of heart. According to reports, FTX is a lofty $8 billion in the hole. Sam Bankman-Fried (SBF) alone owes lenders over $650 million, and rumors exist that he may be on the run. Unfortunately, much of the debt resulted from mishandling customer funds used to leverage the firm's operations — no bail-out for FTX.
Authorities have likewise entered the show after the Department of Justice launched an investigation into the firm.
Market update 🌍
BTC/USD 1D
The FTX saga led to plummeting asset prices across the board and hard damage to the image of crypto. As a result, BTC failed to hold the $19k support level and hit a two-year low of $15,632. A lack of liquidity will induce violent price swings, which will test leveraged positions in the coming days to weeks. BTC completed the daily candle down -14.41% to $15,887.
High-resolution chart.
SOL/USDT 1D
The protocol next in line to challenge Ethereum now faces some catastrophic challenges. For one, there are numerous wrapped assets on the Solana blockchain that FTX issued, which could lead to a barrage of problems and further liquidations. More importantly, its biggest investor FTX Ventures, has gone insolvent alongside the rest of the FTX family. While these former giants begin unwinding balance sheets, the SOL token could continue to suffer. SOL is down -42% to $14.46.
High-resolution chart.
Newswatch 📰
Binance’s Proof-of-Reserve pledge. Inspired by recent events, Binance CEO Changpeng Zhao (CZ) stated the firm would soon start a Proof-of-Reserves audit system to allow verification of its asset holdings. The system uses Merkle Tree technology to allow total transparency. The statement led to many other exchanges stating they would implement similar strategies, including Crypto.com.
NEXO's last-minute ditch. According to the tweet below, crypto exchange NEXO withdrew all funds, amounting to $219m, from FTX hours before its collapse.
News tidbits:
Elon Musk says Twitter will do lost of “dumb things” in the coming months.
Subway testing Bitcoin’s lightning network in Germany.
Galaxy Digital had $76m exposure to FTX.
NFT & metaverse update 🐵
OpenSea will continue to enforce creator fees on all existing collections.
My five cents
It is definitely a tough time for the entire crypto space. Unexpected events like the collapse of major players in the space - in this case, FTX - can only do harm. Bitcoin and the overall market may take some time to recover, but at the core of it all, the fundamentals of blockchain and many web3 projects building on top of it have not changed. We must remember that FTX was a centralized crypto exchange, not a representative web3.
At the same time, we look at the silver lining of the situation - aka many crypto exchanges now agreeing to provide Proof-of-Reserves which will be publicly available for all to see. More transparency, in this case, is good.
And just in case you were wondering… will our conviction in the space be tested? Not a chance!
Be safe out there, Banter Fam.
Gabriel
Follow me on Twitter for daily updates!