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How the collapse of FTX will affect the crypto industry

The past year was unusually rich in all sorts of negative moments in the crypto world: we have already seen colorful drops of Terra/Luna, Celsius and Three Arrows Capital. Every such event is rippling across the market: all crypto assets are falling on the edge of panic simultaneously. It should not be expected that this time will be an exception: the almost inevitable transformation of the fourth-largest FTX crypto exchange into a full-fledged bankruptcy in a few days was a shock for crypto investors.

For two days on November 8-9 Bitcoin fell by more than 20%, and the ether - by almost 30%. At the moment, the price of Bitcoin reached less than $16,000 - the minimum for the last two years (since November 2020). The so-called altcoins did not stay aside: for example, Solana (SOL) fell more than twice in those two days (the fact that in addition to a large amount of FTT, the balance of the collapsed Alameda fund also had a significant share of assets in this coin).

Tether (USDT), the largest stablecoin with capitalization of more than $68 billion, suffered in a wave of panic: according to CoinMarketCap, on October 11 USDT quotations fell to 98 cents per dollar, which is a threatening sign for such tokens (especially considering that there were some questions to Tether in terms of financial soundness before). However, a similar short-term reversal of the USDT was already taking place in May 2022 due to the collapse of Terra/Luna - after that, stablecoin was able to regain its rate 1:1 to the dollar in a fairly fast time (and now the return to 99.9 cents occurred on the same day).

Some in the crypto community have already said that this whole FTX situation is a prime example of how moving away from the ideals of maximum decentralization that Bitcoin was originally built on is endangering the entire industry. The dominance of exchanges and other centralized institutions leads to excessive dependence on individuals, and if they are found to be excessively arrogant in their business approaches - this reduces the overall sustainability of the industry, and it's starting to look like the traditional financial system.

In response to these concerns, a number of major crypto exchanges (including Huobi, OKX, and KuCoin) have announced their intention to publish transparent evidence of the adequacy of their reserves directly on the blockchain - and Binance has already done so, listing the addresses of specific crypto wallets with assets worth $69 billion.

Recall that Samuel Bankman-Fried's rapid rise to the top of the crypto industry is littered with the shadows of less successful companies. The crypto winter that broke out in 2022 led to the bankruptcy of many large projects - and Samuel often turned out to be the kind of man who was willing to buy them back for a pittance at the time of their greatest vulnerability: such deals were negotiated with Voyager, BlockFI and Celsius (however, not all of them have reached the conclusion).

It is all the more ironic that the same fate befell Bankman-Fried himself in the end - and as a savior for nothing, who at the last moment refused the deal, this time stood his main rival - Changpeng Zhao.

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