What has changed in the month after FTX crashed? What is the future of crypto?

It is December 8 on the calendar. A month ago, the last chord was played in the FTX’s music, after which the exchange’s token quotes started heading down and events began to happen, from which the industry will be recovering for a very long time, in the crypto industry. It is time to remember interesting events, which were caused by the FTX crash, see what is going on today, and think about the consequences the moments of the past will lead to.

A brief recap

Everything started with the harmless phrase “We can’t withdraw the client’s money, for now, wait a bit” on November 7. At the moment, users wanted to withdraw their money from their accounts on the American cryptocurrency exchange but faced insurmountable difficulties. After this, FTX filed for bankruptcy and Sam Bankman-Fried resigned as the CEO of the American bankrupted crypto exchange.

FTT quotes, native FTX token

Consequences

This event will become one of the most unforgettable cases in the history of the crypto industry because many companies still keep crashing due to this. Many platforms, regardless of being decentralized or centralized, held almost all their money and their clients’ financial savings on the US crypto exchange FTX. It was relevant for both representatives of DeFi protocols and other spheres like DEX platforms, investment funds, and others.

We have recently said that the company Genesis and the holding Digital Currency Group were embroiled in huge debts that they cannot now pay off without help that only investors can provide, and the possibility of such an event is not so big.

Genesis is close to bankruptcy. The company may become the next victim of the chain reaction

Financial issues

Among other unpleasant cases related to the crash of FTX, BlockFi is also worthy of mention, along with outstanding debt obligations from the American crypto exchange. Sam Bankman-Fried’s company remained in debt to BlockFi for over $1,000,000,000. Now, the company that lends digital assets has faced big problems, which will lead it to the same outcome Terra (LUNA), FTX, Three Arrows Capital, and other bankrupted platforms had suffered

The CEO of the famous crypto platform Coinbase, Brian Armstrong stated that the company’s income will drop twice in 2022 compared to the achieved results in 2021. According to a more pessimistic scenario, losses will be even more than it was initially expected. To understand the situation, it is worth noting that Coinbase had expected to have losses of $500,000,000 at the beginning of 2022 but as of November 8, it is more than $3,100,000,000.

Coinbase was not an exception and also faced financial problems

Photo: Thiago Prudencio — Sopa Images/Lightrocket/Getty Images

From more global moments, it is worth mentioning the lost confidence of investors towards a crypto exchange in general. After the event that happened, there was a mass withdrawal of crypto savings. At the same time, analysts see pros in such moments because with the move towards the use of hardware wallets, many crypto enthusiasts will be able to protect themselves from colossal losses.

The development of hardware wallets

Due to the distrust of crypto exchanges, hardware devices storing crypto assets on investors' portable devices become widespread. Together with this, the CEO of Ledger reported the most successful sales week of wallets in the history of the company. However, he has not revealed financial details.

By the way, Ledger has recently presented a new device called Stax. One of the employees who had worked on early Apple devices was developing it, which can be seen in the design of the new device Ledger Stax.

Falling popularity of NFT tokens

Despite the sector of non-fungible tokes mostly suffering during the whole year due to the global downward trend and the turnover falling by 92% in 2022, compared to 2021, the FTX events have influenced the NFT structure. In light of the global distrust of the crypto world, many crypto investors have begun to sell their non-fungible items and withdraw them in fiat or convert values into cryptocurrencies with further withdrawal to a wallet.

This reduced not the highest prices compared to what we had seen in 2021. However, big companies like Porsche, Prada, Nike, Dolce & Gabbana, and others do not lose optimism and continue working on collections that could attract new clients to their products.

The NFT token bought by Justin Bieber for $1,300,000 has fallen in price by 95%

Investigations

After this news, the FTX exchange is under proper supervision and regularly attracts the interest of various law enforcement agencies. It has become known recently that the team that works on the restructuring of the FTX exchange had hired financial criminologists from AlixParters to investigate and find their client’s lost funds.

Matt Jacques, an ex-chief accountant of the US Securities and Exchange Commission (SEC) has decided to take responsibility for coordinating specialists in this investigation. She will do everything she can to find and return the money of the FTX clients that has been lost due to Sam Bankman-Fied’s fraud. The objective is not simple because the fraud scheme had been well-prepared before it was realized. The CEO of the crypto platform Coinbase Brian Armstrong stands in the same position. The ex-owner of FTX refuses his connection to the events. He says that a group of people, consisting of 8 people, stays behind the fraud act and Sam is also looking for them and he is close to identifying them.

Sam Bankman-Fried accused of fraud and many negative events in the crypto industry in recent days

Photo: TIME

Regarding the topic of investigations, it is worth reminding about the American prosecutors who will check the involvement of the ex-CEO of FTX in other big events. According to them, Sam Bankman-Fried could control manipulations with LUNA and TerraUSD. The last one, of course, keeps refusing his involvement in any kind of illegal activities.

The suspicion of the former CEO of the American crypto exchange increased after he refused to visit the hearing in the FTX crash case. He received an unofficial invitation from Maxine Waters, however, he said that he was not ready for it. The remarkable thing is that the Texas State Securities Board has already released an official invitation for Sam and he has no right to refuse it. The hearing is scheduled on February 2, 2023.

What’s coming up next?

Due to many companies facing heavy financial difficulties, we may expect a new wave of cryptocurrency exchange closures. Genesis relates to the Digital Currency Group holding and that DCG group in perspective could be at risk. The organizations have debts that amount to hundreds of millions and billions of dollars, which is almost impossible to solve without the support of investors. Because of the loss of credibility, investors are unlikely to help them, and saving all your funds in the American exchange without the diversification of your financial resources is not the wisest thing, which can also be pointed out by experienced investors.

Despite the crypto sphere being filled with mistrust now, Binance still tries to deal with this issue. They have brought in the audit firm Mazars which had worked on the ex-president of the USA, Donald Trump’s company. The objective of the audit was to prove to users that the big crypto exchange has enough money to pay off its clients in the case of force-majeure circumstances. The audit was over and, according to Mazars, the reserves of the main cryptocurrency are secured by 101% collateral and amount to a total of 575,742 BTC. The dollar equivalent of the reserves exceeds $97,000,000. Also, Binance stated that the company will help to restore the world of cryptocurrencies and provide $1,000,000,000 of aid to companies that are in a difficult position.

Changpeng Zhao makes efforts to restore the crypto industry

We will see more bankruptcy of crypto platforms but the wave of negative events will be over and the digital assets market will start its growth once again. Such cases happened in the past and 2022 has become extremely difficult for the world of cryptocurrencies but Bitcoin has proved that despite many negative expectations, it is still doing good. The main cryptocurrency asset is still in a global downtrend but we will probably find the bottom line and go to the new bull cycle soon, namely, in the upcoming months.

The development of the decentralized exchanges

The decentralized exchanges will have a new portion of development after these events. Several aspects point to this. First of all, the loss of trust in centralized exchanges by investors and, secondly, the slow drift of the crypto industry towards DeFi. Different persons who have an impact in the industry and their opinion is considered also discuss this. Patrick Hillmann who holds the position of the Chief Strategy Officer at Binance has announced the possible disappearance of the biggest cryptocurrency platform due to the rapid development of the decentralized financial sector. We could see how the cryptocurrency sphere has changed in the last 10 years. Two years will be enough to understand the speed of its development. We can conclude that Patrick Hillmann will probably be right and the industry will change drastically and focus on decentralized operations in 10 years.

Decentralized finances (DeFi) — is it a future of crypto?