The aftershocks from last week’s enormous earthquake in the trillion-dollar crypto market were still felt on Monday.
The turmoil enveloping the market grew worse over the weekend, causing prices of digital currencies to decline once more. The biggest cryptocurrency in the world, Bitcoin, has lost nearly 65% of its value this year. It was selling for around $16,500 on Monday, and analysts predict that it may drop as low as $10,000 over the next few days.
Meanwhile, ethereum, the world’s second most valued cryptocurrency, is not faring any better. It was trading at $1,231.53 on Monday, down more than 20% in the previous week.
The drop comes as investors continue to struggle with the dramatic implosion of the FTX Group, one of the industry’s largest and most influential companies.
Some industry insiders believe the company’s demise prompted a “Lehman moment,” referring to the investment bank’s 2008 collapse, which sent shockwaves around the world.
The incident has shattered trust in the cryptocurrency sector and will give international regulators more confidence to tighten the noose. Some of the greatest names in the industry stated that they would welcome the examination if it helped to rekindle public confidence in the sector.
According to Changpeng Zhao, the head of cryptocurrency exchange Binance, there is “a lot of risks.” We’ve seen the industry go crazy in the last week, so we do need some controls, and we do need to do this correctly, he continued.
On Monday, CZ, the CEO of Binance, spoke at a gathering in Indonesia. He claimed last week that it is “probably an accurate analogy” to compare the present cryptocurrency upheaval to the global financial crisis of 2008.
Zhao played a significant role in the events leading up to FTX’s demise. Earlier in the week, Binance and FTX had reached a tentative rescue agreement, but the accord was quickly abandoned.
Following its bankruptcy filing on Friday, FTX kept losing ground over the weekend. Additionally, the admission of another well-known name in the sector of misusing funds alarmed investors even more.
Here is how events have developed over the past few days, demonstrating how the crisis is still in its early stages.
Bahamas criminal investigation
Former CEO Sam Bankman-Fried praised The Bahamas at the time as “one of the few nations to set up a full framework for crypto” when FTX relocated its headquarters from Hong Kong to The Bahamas last year.
Authorities in The Bahamas announced on Sunday that they were looking into possible criminal activity related to the collapse of the corporation.
The Bahamas Securities Commission and a team of financial investigators from the Financial Crimes Investigation Branch are collaborating closely to look into any possible instances of criminal misconduct, according to a statement from the Royal Bahamas Police Force. In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd.
Authorities’ specific line of inquiry into the abrupt demise of FTX is unclear.
The exchange’s 30-year-old founder, Bankman-Fried, was a prominent figure in the cryptocurrency world and amassed a fortune that once totaled $25 billion but has since disappeared. He had already intervened to save struggling businesses after the demise of the TerraUSD stablecoin in May, earning him the reputation of being the crypto world’s white knight.
FTX quickly grew to be one of the largest cryptocurrency exchanges in the world thanks to the support of eminent investors like BlackRock and Sequoia Capital. It collapsed because Alameda, FTX’s cryptocurrency hedge fund, decided to lend billions of dollars’ worth of customer funds to finance dangerous wagers.
A potential breach
The Bahamas inquiry started a day after the insolvent exchange announced it would conduct its own investigation.
After FTX said on Saturday that it was investigating if crypto assets had been stolen, all of its digital assets have since been taken down. The theft of $473 million in cryptocurrency assets from FTX is reportedly unsubstantiated, according to crypto risk management company Elliptic.
FTX General Counsel Ryne Miller stated in a tweet sent out early on Saturday that the company “took precautionary procedures” and relocated all of its digital assets to cold storage. Miller tweeted that the procedure was “accelerated” Friday night “to mitigate damage upon noticing fraudulent transactions.”
In a statement made late on Friday, Miller stated that FTX was “investigating irregularities” relating to changes to cryptocurrency wallets that were “connected to aggregation of FTX holdings across exchanges.” The company will provide further information as soon as it is available, but the details are still murky.
Accidental transfers and a warning from Binance
Another significant incident over the weekend scared investors as scrutiny of prominent figures in the cryptocurrency sector grows. The Singapore-based Crypto.com company acknowledged wiring more than $400 million worth of ethereum to the incorrect account by mistake.
Its CEO, Kris Marszalek, claimed on Twitter on Sunday that the transfer of 320,000 ETH was transferred to a business account at rival exchange Gate.io, not one of its offline or “cold” wallets, three weeks ago.
Even though the money was recovered, people are leaving the site because they want to avoid what happened to FTX.
In order to better manage these internal transfers, they have since enhanced their procedures and processes, Marszalek tweeted on Sunday. According to sources on, the platform’s native token has decreased by almost 20% during the past 24 hours.
Binance CEO Zhao hinted at the difficulty of regulating the sector during the conference in Bali.
He said on Monday that while it is the “logical response of the government to borrow legislation from existing banking institutions,” cryptocurrency exchanges operate very, very differently from banks.
Moving customer assets for investments in an effort to generate returns is fairly common for banks, he went on to say. He added that if a crypto exchange operated in such manner, it is “virtually guaranteed to go down” and that the sector as a whole had a responsibility to safeguard consumers.
Regulators have a part… yet no one can shield a poor performer, he said.
