Everybody has a question in mind if the crypto world has touched its bottom. Since November, up to $2T has vanished from the crypto market. TerraUSD and Luna (the two close digital assets), with $16B and $40B valuations respectively, have crashed. Recently this month, the trading value of Bitcoin has also plunged below the level of $20,000 which is its lowest point since 2020’s December.
However, the fallout is well beyond its completion. Formerly this month, Three Arrows Capital (3AC) – a crypto trading company with a valuation of up to $200M in Luna’s exposure – was reported to be almost bankrupt. The platform had borrowed huge cumulative amounts from several crypto companies taking into account BlockFi (which is based in New York) and Voyager Digital (based in New Jersey).
Sam Bankman-Fried Stretches His Hand to Assist 3AC
To endure the default of the Three Arrows Capital, the aforementioned two exchanges of digital assets moved toward Sam Bankman-Fried (the richest individual within the crypto space as well as the FTX’s founder) for approximately $20.5B. Between Alameda (the quantitative trading company of Bankman-Fried) and FTX, he delivered the firms with credit lines of up to $750M. It is not sure whether the FTX founder will recover the investment thereof. He stated that they intend to have a bad contract in stabilizing things as well as to protect the users.
The cash infusions by Bankman-Fried are beyond being altruistic. He has proven to be a genius venture capitalist within the struggling market of cryptocurrency, having the confidence that his wealth is determined by its healthy jump as well as growth. In addition to this, Bankman-Fried has purchased some shares at Robinhood (a crypto brokerage firm), where a stake of up to 7.6% has in advance been collected on the behalf of FTX, and the firm is reportedly contemplating an acquisition.
Bankman-Fried Negates Doing Any Direct Merger Interactions with Robinhood
The reports that he is involved in any direct merger interactions with Robinhood have been refuted by Bankman-Fried however he mentioned that soon additional crypto exchange disasters are waiting to occur. A few third-tier exchanges are in advance underhand bankrupt, in his words. FTX of Bankman-Fried, as well as Binance, Kraken, and Coinbase, are the prominent names among the exchanges of digital assets.
Crypto Exchange Hacks Mount with Time
There are several million consumer accounts opened on these exchanges with similar functionality as the online stock brokerages that operate online. Nonetheless, other than these whales, up to six hundred crypto exchanges working throughout the globe are unregulated. He opined that with the deficiency of any significant regulatory oversight several exchanges of cryptocurrency have been at risk of being manipulated by hacks or by scammers.
Coincheck, an exchange based in Japan, has been hacked for up to $530M worth of cryptocurrency a couple of years back, and after that – in 2021’s December – Bitmart (based in Cayman Island) was infringed for nearly $200M. Formerly in 2016, a hack took place in Bitfinex for up to 120,000 BTC (almost $2.5B at the moment).
As per Fried, notwithstanding the generous bailouts, even he is not capable of or intending to offer good funds after bad in infinity and it is not possible for many firms that have gone beyond having a backstop due to the issues related to regulation or balance sheet or deficient business.