Crypto’s biggest players are attempting to avoid a (block)chain reaction.
After the epic collapse of crypto firm FTX last week, the rest of the industry’s key exchanges — Binance, Crypto.com, and the like — are rushing to ward off panic by proving that their operations are not built on similarly shaky foundations, or engaging in possibly fraudulent malpractice. Still, investors are rapidly pulling out of digital assets.
Wag the Doge
The FTX meltdown — spurred by revelations that the firm’s apparent self-dealing left it with less than $1 billion in assets to cover $9 billion in liabilities — was enough to send crypto power investors into a state of deep self-reflection. Wary of a run, the biggest exchange, Binance, as well as OKX, Crypto.com, and Derebit have all since promised to publish proof that they can cash out every user. Coinbase emailed its customer on Friday, assuring its “business is different and ultimately better protects” investors.
But that doesn’t seem to be stopping a major crypto culling. Between investors pulling out their cash while they still can and Crypto.com announcing an incredibly ill-timed flub, tales from the crypt-o have been terrifying:
- Tether, the largest US dollar stablecoin on the blockchain, has seen roughly $3 billion worth of redemptions during the four days from Thursday to Sunday, data provider CoinMarketCap reports. Meanwhile ether balances, the number two cryptocurrency behind bitcoin, has dropped about 7% — worth roughly $2 billion — during the same timeframe, blockchain analytics platform Nansen reports.
- Over the weekend, Crypto.com CEO Kris Marszalek tweeted that the exchange mishandled (read: sent to the wrong account) a roughly $400 million ether transaction, an admission that came only after Twitter users flagged a strange transaction on the blockchain.
Binance CEO Changpeng Zhao said comparing the potential FTX aftershocks to the 2008 financial crisis is “probably an accurate analogy.” That may be overinflating his industry’s importance, but you might just wanna check in on the basement-dwelling, Reddit-posting, crypto-dealing cousin in your life nonetheless.
The Name Game: As if FTX’s high-speed car crash couldn’t get any more embarrassing, it also lost the naming rights to the Miami Heat’s basketball arena over the weekend after signing a 19-year, $135 million deal just last year. Basketball fans in Los Angeles may want to take note: Crypto.com Arena, the stadium-formerly-known-as-Staples-Center, could be next. Though at this point in the Lakers’ disastrous season, any change is probably a good change.