- Binance CEO Changpeng Zhao has warned of a “cascading effect” following the collapse of FTX at a recent conference in India, as reported by the Financial Times.
- CZ believes the full impact of the tragic deterioration of the FTX meltdown has yet to be felt in the crypto industry.
- FTX-related platforms such as BlockFi have already started to face the heat, but Binance’s CZ warns that other platforms will also be affected.
- Alameda’s bankruptcy threatens more than 170 projects it has supported over the years.
- The fate of the company acquired by FTX remains unknown.
The collapse of FTX has a cascading effect
According to a Financial Times report, Changpeng Zhao has warned that several companies may go bankrupt in the near future as a direct result of the chaos caused by the troubled crypto exchange FTX. . At a conference in Indonesia, Zhao compared the current woes of the cryptocurrency market to the financial crisis of 2008.
Industry experts see the collapse of FTX as the beginning of another contagion. Changpeng Zhao believes the full impact of FTX’s collapse has not yet been felt.
“When FTX falls, we see a cascading effect,” said Changpeng Zhao. “Especially for those close to the FTX ecosystem, it will be negatively impacted,” he said.
The full impact may not be out yet, but the industry is already seeing the impact of FTX’s demise.Cryptocurrency Lender BlockFi bailed out By FTX in July following Terra’s crash. FTX has extended a $400 million line of credit with potential future acquisitions.
block phi announced We announced earlier today that we have suspended withdrawals on our platform due to liquidity issues with FTX and Alameda.block phi is reportedly Store all customer deposits in FTX.
Voyager Digital is another platform that will have to face the consequences of SBF’s actions. A bankrupt cryptocurrency lender was due to receive $1.4 billion from FTX. This sale is likely to be discontinued, affecting thousands of Voyager customers.
FTX’s sister company, Alameda Research, has spent millions of dollars backing more than 170 projects, according to Crunchbase data. The fate of these projects, and those acquired by FTX, including Bitvo, LedgerX and others, are currently unknown.
Aside from the direct impact, we need to consider what this means in terms of regulatory enforcement. Lawmakers are already calling for greater oversight and regulation. Regulators are beginning to investigate her FTX trading. The initial contagion gave the SEC a pretext for law enforcement regulation.