The current situation in the cryptocurrency industry echoes the 2008 financial crisis, and in the coming weeks even more companies may go under. This is the view of Binance CEO Changpeng Zhao, according to the Financial Times.
At a conference in Indonesia he suggested the market still has to feel the consequences of the FTX crisis and Alameda Research.
\”With the collapse of FTX we will see cascading effects. Those closest to the ecosystem will be hardest hit,\” Zhao said.
Colin Wu shared a similar view after FTX Group filed for bankruptcy. In his words, the projects and tokens in which Sam Bankman-Fried’s exchange and Alameda Research invested were at risk.
As FTX and Alameda begin bankruptcy and reorganization in accordance with Chapter 11, the companies and tokens they invest in are also on the verge of being liquidated. We have counted the companies that FTX and Alameda have invested in so far: https://t.co/IvkDKlddSI pic.twitter.com/tIgerIlHQB
— Wu Blockchain (@WuBlockchain) November 11, 2022
Despite the pessimistic outlook, the head of Binance expressed confidence that the industry will eventually recover.
On November 6, Zhao stated that the company aimed to divest from the exchange’s utility token FTT. Assets, together with BUSD totaling about $2.1 billion, were the result of the company’s exit from its portfolio investment in the platform.
On November 8, Bankman-Fried and Zhao announced a strategic partnership, but on November 10 Binance abandoned the acquisition of FTX. The company said that it would not be able to resolve the problems facing the exchange.
Industry participants hurried to distance themselves from Sam Bankman-Fried’s platform and Alameda Research. One of FTX’s investors, venture firm Sequoia Capital, wrote off investments of $213.5 million.
According to media reports, U.S. regulators began to study FTX’s ties to its U.S. subsidiary and Alameda Research. The Department of Justice has also taken an interest in the platform’s activities.
As reported on November 9, Circle’s co-founder and CEO Jeremy Allaire compared FTX’s problems to the collapse of Lehman Brothers, which catalyzed the 2008 crisis.
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