{"id":5173,"date":"2022-12-05T19:25:10","date_gmt":"2022-12-05T19:25:10","guid":{"rendered":"https:\/\/icoholder.com\/blog\/?p=5173"},"modified":"2025-03-05T19:14:52","modified_gmt":"2025-03-05T19:14:52","slug":"ftx-cryptocurrency-market-collapse-impact-on-crypto-industry","status":"publish","type":"post","link":"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/","title":{"rendered":"FTX Cryptocurrency Market Collapse &#8211; Impact on Crypto Industry"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_75 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/#FTX_and_this_crazy_crypto_week\" >FTX and this crazy crypto week<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/#How_did_FTX_the_second_biggest_exchange_become_insolvent\" >How did FTX, the second biggest exchange, become insolvent?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/#Binance_CEO_CZs_Tweet_Sparks_FTX_Collapse\" >Binance CEO CZ&#8217;s Tweet Sparks FTX Collapse<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/#Final_thoughts\" >Final thoughts<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"FTX_and_this_crazy_crypto_week\"><\/span>FTX and this crazy crypto week<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-pm-slice=\"1 1 []\">Last week was one of the craziest in cryptocurrency history. If you\u2019ve been under a rock, you may not have heard that FTX, the second-largest crypto exchange, has collapsed. The news of its insolvency spread quickly, worsening the fear and uncertainty already plaguing the market. The FTX cryptocurrency market collapse sent panic throughout the industry.<\/p>\n<p>Many crypto holders feared for their funds. A wave of withdrawals began on other exchanges, triggered by a possible domino effect, which is common in the crypto industry. This raised questions about the safety of exchanges, especially Crypto.com. Many exchanges provided proof of their liquid assets to reassure their communities.<\/p>\n<p>Solana was one of the hardest-hit cryptocurrencies. The Solana Foundation held 134.54 million SRM tokens and 3.43 million FTT tokens on FTX, valued at $190 million before FTX froze withdrawals on Nov. 6. Additionally, FTX held many millions in Solana tokens, which it had to sell to meet withdrawal demands. The shock from the FTX collapse hit Solana hard, causing its token value to drop by 57% in a week. The FTT token, a key part of the FTX ecosystem, lost over 95% of its value.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_did_FTX_the_second_biggest_exchange_become_insolvent\"><\/span>How did FTX, the second biggest exchange, become insolvent?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-5175 aligncenter\" src=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_188.png\" alt=\"\" width=\"540\" height=\"282\" srcset=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_188.png 540w, https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_188-300x157.png 300w, https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_188-115x60.png 115w\" sizes=\"auto, (max-width: 540px) 100vw, 540px\" \/><\/p>\n<p>In case you didn\u2019t know, there was a long ongoing crypto drama between CZ, the CEO of Binance, and SBF, who is the CEO of FTX. Binance initially invested in FTX when the latter was founded. Later on, FTX bought back Binance\u2019s stake for $2 billion in BUSD and FTT tokens as a move to become more independent from the worldwide number-one exchange.<\/p>\n<p>There was a lot of tension and growing rivalry between the two CEOs and the drama was only beginning. SBF then started to fund anti-Binance articles that were heavily criticizing the platform and spreading misinformation to media and even attacked CZ\u2019s children. SBF also had a lot of Washington and Wall Street connections and started lobbying regulators in the United States against Binance.<\/p>\n<p>Then a company co-founded by SBF named Alameda, which does market making, <a href=\"https:\/\/tradecrypto.com\/academy\/defi-academy\/what-is-yield-farming-and-how-does-it-work\/\">yield farming<\/a> and other magic internet money-related services, saw one of their balance sheet research leaked. FTX and Alameda are considered by many to be one entity which makes them very related. The leaked balance sheet showed alarming numbers concerning the company\u2019s financial situation, with many illiquid altcoins and mainly locked FTT tokens.<\/p>\n<p>Moreover, the market for FTT tokens was fragile and only $1 million of selling pressure could significantly move the FTT price lower, as pointed out by Dylan Le Clair, a senior analyst. Knowing that Alameda was using the locked FTT tokens as loans collateral, they would be obliged to sell some of their assets to avoid facing margin calls and, eventually, assets\u2019 liquidation.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-5176 aligncenter\" src=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_189.png\" alt=\"\" width=\"541\" height=\"305\" srcset=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_189.png 541w, https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_189-300x169.png 300w, https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_189-106x60.png 106w\" sizes=\"auto, (max-width: 541px) 100vw, 541px\" \/><\/p>\n<h2 data-pm-slice=\"1 1 []\"><span class=\"ez-toc-section\" id=\"Binance_CEO_CZs_Tweet_Sparks_FTX_Collapse\"><\/span>Binance CEO CZ&#8217;s Tweet Sparks FTX Collapse<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-pm-slice=\"1 1 []\">This information was quite interesting to CZ, who was unhappy with SBF\u2019s unethical competition. CZ later posted a tweet that shook the market. He said, \u201cLiquidating our FTT is just post-exit risk management, learning from LUNA. We gave support, but we won\u2019t pretend to make love after divorce. We are not against anyone, but we won\u2019t support people who lobby against other industry players behind their backs. Onwards.\u201d<\/p>\n<p>The FUD (fear, uncertainty, and doubt) reached serious levels. Many big crypto players began shorting FTT tokens after Caroline Ellison, CEO of Alameda, tweeted: \u201c@Cz_binance if you\u2019re looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22!\u201d This tweet confirmed the dangerous financial situation of Alameda and FTX. It triggered a bank run, as people feared the exchange wouldn\u2019t have enough liquidity for withdrawals.<\/p>\n<p>Sam Bankman-Fried (SBF) stepped down as FTX\u2019s CEO in the days after the withdrawal freeze. FTX and over 130 affiliated companies filed for bankruptcy. Some hoped for a recovery, especially after Binance initially offered to buy FTX. However, Binance quickly backed out when the full extent of FTX\u2019s financial situation became clear.<\/p>\n<p>SBF stepped down and John Jay Ray III took over as the new CEO. He was the person who oversaw the Enron scandal. Meanwhile, hackers breached the FTX platform, draining around $1 billion to external wallets. Many believe the breach was an inside job.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Final_thoughts\"><\/span>Final thoughts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-pm-slice=\"1 1 []\">In conclusion, this major crypto event offers a valuable lesson. The FTX cryptocurrency market collapse highlights the risks of holding funds on centralized exchanges. You can never be 100% sure that your funds are safe.<\/p>\n<p>Investing in a cold wallet is a safer option. A cold wallet is a physical device that securely stores your cryptocurrencies offline. It can help you avoid situations like this in the future. Always stay informed about the latest news regarding the exchanges and cryptocurrencies you use. Early awareness has helped many FTX users protect their funds. Before learning to do this, you need to know <a href=\"https:\/\/breldigital.com\/how-to-follow-current-trends-in-crypto-world\/\">what to follow to understand the latest Crypto and NFT trends<\/a>. Stay safe and <b>DYOR<\/b>!<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-5177 alignleft\" src=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_190.png\" alt=\"\" width=\"119\" height=\"118\" srcset=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_190.png 119w, https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_190-61x60.png 61w\" sizes=\"auto, (max-width: 119px) 100vw, 119px\" \/><\/p>\n<p style=\"text-align: left;\"><b>Author: Sviatoslav Pinchuk<\/b><span style=\"font-weight: 400;\">, COO of <\/span><a href=\"https:\/\/tradecrypto.com\/\"><span style=\"font-weight: 400;\">TradeCrypto<\/span><\/a><span style=\"font-weight: 400;\"> is a crypto journalist who simply bought some BTC for domestic needs in 2014 and then forgot about it till 2017. He got Etherium in 2017 by misclick and sold it in 2018 \u201cjust to try\u201d. After losing 1 Florida house on XEM in 2018, Sviatoslav finally decided to trade reasonably. He is one of the most analytical and data-driven traders in the crypto industry.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FTX and this crazy crypto week Last week was one of the craziest in cryptocurrency history. If you\u2019ve been under a rock, you may not &hellip; <\/p>\n","protected":false},"author":1,"featured_media":5174,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,44,34],"tags":[],"class_list":["post-5173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","category-investment","category-trading"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FTX Cryptocurrency Market Collapse - Impact on Crypto Industry<\/title>\n<meta name=\"description\" content=\"The FTX cryptocurrency market collapse shook the industry, causing massive losses and highlighting risks of centralized exchanges - IcoHolder.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FTX Cryptocurrency Market Collapse - Impact on Crypto Industry\" \/>\n<meta property=\"og:description\" content=\"The FTX cryptocurrency market collapse shook the industry, causing massive losses and highlighting risks of centralized exchanges - IcoHolder.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/\" \/>\n<meta property=\"og:site_name\" content=\"ICOholder Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/icoholdercom\/\" \/>\n<meta property=\"article:published_time\" content=\"2022-12-05T19:25:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-03-05T19:14:52+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_187.png\" \/>\n\t<meta property=\"og:image:width\" content=\"542\" \/>\n\t<meta property=\"og:image:height\" content=\"295\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Terry Ashton\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@icoholder\" \/>\n<meta name=\"twitter:site\" content=\"@icoholder\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Terry Ashton\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"FTX Cryptocurrency Market Collapse - Impact on Crypto Industry","description":"The FTX cryptocurrency market collapse shook the industry, causing massive losses and highlighting risks of centralized exchanges - IcoHolder.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/","og_locale":"en_US","og_type":"article","og_title":"FTX Cryptocurrency Market Collapse - Impact on Crypto Industry","og_description":"The FTX cryptocurrency market collapse shook the industry, causing massive losses and highlighting risks of centralized exchanges - IcoHolder.","og_url":"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/","og_site_name":"ICOholder Blog","article_publisher":"https:\/\/www.facebook.com\/icoholdercom\/","article_published_time":"2022-12-05T19:25:10+00:00","article_modified_time":"2025-03-05T19:14:52+00:00","og_image":[{"width":542,"height":295,"url":"https:\/\/icoholder.com\/blog\/wp-content\/uploads\/2022\/12\/Screenshot_187.png","type":"image\/png"}],"author":"Terry Ashton","twitter_card":"summary_large_image","twitter_creator":"@icoholder","twitter_site":"@icoholder","twitter_misc":{"Written by":"Terry Ashton","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/#article","isPartOf":{"@id":"https:\/\/icoholder.com\/blog\/ftx-cryptocurrency-market-collapse-impact-on-crypto-industry\/"},"author":{"name":"Terry Ashton","@id":"https:\/\/icoholder.com\/blog\/#\/schema\/person\/473536da0d427327be7084eaa9e8f881"},"headline":"FTX Cryptocurrency Market Collapse &#8211; 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