The fall of FTX brought with it lots of crypto wealth in the digital currency industry. The result was a crypto price pandemic, increased inflation and hiked interest rates, hence shedding billions of dollars in capital in the blockchain universe.
Lost Crypto Wealth Due to Bankruptcy Filings
Consequently, high-profile firms like Terra (LUNA) crashed and forced other big corporations like Three Arrows into bankruptcy. Other companies that did not escape the hard crash include Celsius, Voyager Digital and BlockFi succumbed to inevitable bankruptcy. The eventual bear conditions caused the price of Bitcoin to drop from $69K to below $18K. At the helm of the crash, a whopping $2 trillion got wiped away. A study by Forbes researchers indicated both founders and investors lost a combined $116 B within only 9 months in 2022. In the study, 15 major investors and founders had the bear market wipe away at least half of their entire wealth. Worse of the blow is that the losses resulted in 10 of the investors losing their billionaire status, and hence facing a negative implication on their lifestyle.
Binance Exchange head ChangPeng Zhao or CZ with an estimated 70% stake in Binance saw his wealth drop from $65B peak to $4.5 B. In fact, a tweet from CZ became the main cause of the price rampage taking place after the fall of FTX. The CEO announced they would be selling the last of its FTT token FTX’s native token); this triggered FTT holders to go into a selling spree, therefore significantly impacting the price of the token.
At the moment, Binance still facing increasing scrutiny from law enforcement officers, authorities and financial agencies in both Europe and America. The officers are accusing CZ and his company of allegedly facilitating illicit activities such as money laundering and funding terrorist groups. However, Binance exchange has denied the allegations. Unfortunately, there is still concern and scepticism surrounding the credibility of the exchange.
Binance Exchange Proof of Reserves
The Binance head already acquired the services of auditing firm Mazar to audit and provide public proof of reserve. A proof of reserve evaluates the financial health of a blockchain company. It does this by pointing out its potential liabilities, assets and revenues. Sadly, the public has not taken the reports positively and they still consider them not sufficiently transparent. A lot of cryptocurrency users criticised the Binance proof of reserve as inadequate and unsubstantial.
Besides, Mazars did announce a temporal inability to work with blockchain companies. An announcement that resulted in further scepticism around the PoRs for the exchange. Meanwhile, the CEO pointed out in Webinar at the end of last year about his company has 0 liabilities. The CEO noted that the exchange does not rely on loans but rather continues to thrive as a self-sustaining organization.
Digital Currency Group CEO Barry Silbert is another figure with whom the crypto turbulence has dealt a great blow. His company still owes creditors over $1.8 B despite crashing a few months ago. A bad loan to Genesis caused DCG to crash into a $1.1 billion liability. Furthermore, DCG still has another $575 million debt obligation.
Coinbase CEO Brian Armstrong and FTX Founder SBF
Coinbase’s Brian Armstrong also lost a significant portion of his wealth by a staggering $4.5 B. Ripple Co-founder Chris Larsen on the other hand witnessed a similar fall drop of approximately $4.3B. The Winklevoss twins also saw a collective plummet of $4 B from their wealth by the 2nd quarter of 2022.
FTX co-founders SBF and Gary Wang, who had reached billionaire status saw their fortunes plummet to zero. This occurred due to the market crash caused by the collapse of FTX. Similarly, Barry Silbert, founder and CEO of Digital Currency Group, suffered a staggering loss of his $3.2 billion fortune. According to Forbes, this was just one of many billionaires whose wealth was decimated during the FTX incident.
According to Matt Cohen, the founder of Ripple Ventures, the crypto world has now reached a critical juncture. Due to the immense amount of lost economic value in just a couple of months, everyone needs to recognize the significance of the moment. He believes too many blockchains have no problems to solve. Therefore, necessitating a ‘hard reset’. Moving forward, all involved parties must take great care to ensure that their projects and strategies are truly viable.
Comments (No)