Aaron Kaplan, securities attorney and co-CEO of trading platform Prometheum, said that while the final outcome for FTX and its customers remains unclear, there is precedent in cases like This keeps people from ever getting their money back. Unfortunately, those caught up in the fallout are left with little to no legal means of prosecution, Kaplan said. “The truth will be revealed in time. What is clear at the moment is that FTX is exploiting a gray area at the heart of profit expectations, regardless of the best interests of customers. “
In one Twitter thread Announced bankruptcy, Bankman-Fried implied that he still hopes to help clients recover their capital. But thinking this is unlikely, some FTX customers are trying to raise their account balances at a high discount. Like reported by CoinDesk on November 9, buyers on messaging platform Telegram are bidding between $0.10 and $0.15 for funds tied up in FTX, betting the last chance they might be liberate, release, free.
The financial impact of the collapse also extends far beyond the immediate FTX customer base. The events of the week pushed other cryptocurrencies into a downward spiral, with bitcoin and ether prices both dropping more than 10%, wiping $60 billion off the market. A large amount of SOL, the native token of the Solana network, is owned by FTX and its subsidiaries, and is therefore more heavily affected. Between November 7 and November 9, the value of SOL fell from $32 per coin to $13.
A crypto trader by the name of Mando CT had one point yesterday losing $637,000 holding SOL and various Solana-based NFTs. (The slight rebound in SOL price, combined with other bets, has since helped him recoup some of these losses.) He said he remains confident in Solana’s core value proposition and the quality of the technology, and even bought more SOL in an attempt to “buy down,” but admitted the demise of FTX would have “a major impact on the entire market.”
While developers whose apps stand on top of Solana claim it’s still the best network for building services at scale — CEOs of both Audium and Irreverent Labs, two such development studios, say they don’t care about the price of SOL — others predict the impact of the FTX crash will have an adverse effect on the overall health of the ecosystem.
“Developers in the blockchain space tend to work where the most money is,” said Francesco Melpignano, CEO at Kadena Eco, the company that helps incubating new projects tied to the Kadena blockchain. “If we see money leaking out of Solana, developers will certainly be more incentivized to build elsewhere.”
Elsewhere, BlockFi said it was forced to shut down, quote “Lack of clarity” on the situation at FTX. The crypto lending firm itself was bailed out by FTX US earlier this year after it was caught up in the collapse of Three Arrows Capital, but its future is currently uncertain, illustrating the contagion effect. described by CZ early this morning. “With FTX going down, we should see cascading effects,” he said. “Especially for those close to the FTX ecosystem.”
In the days since the crisis began, FTX’s Bankman-Fried, who is usually a prolific tweeter, has been eerily quiet. In mania Twitter thread posted yesterday afternoon, he broke his silence: “I’m sorry,” he tweeted. “I was damned, and should have done better.”
The founder of FTX gave a puzzling explanation of the events leading up to the collapse (apparently related to the “poor labeling of bank-related accounts”) and set out a plan for the client to execute properly. “We are spending the week doing everything we can to increase liquidity,” he wrote. “Every cent of that — and any existing collateral — goes straight to the user, unless or until we get it right.”
While it would be comforting for those with funds trapped in the exchange, Bankman-Fried himself has suffered unusual losses. Today, Bloomberg report that his personal fortune, worth $16 billion just last week, was completely wiped out in the crash of FTX – every dollar – in what was described as “one of the most devastating the greatest asset in history”.
