Binance’s CEO, Changpeng Zhao, Is Sounding The Alarm About A “Cascading” Cryptocurrency Crisis!

crypto crisis

The trillion-dollar crypto industry experienced a massive earthquake last week, and the aftershocks were still being felt on Monday.

As the crisis in the market continued to worsen over the weekend, digital currency prices fell again. Bitcoin, the most popular cryptocurrency, has fallen by about 65% this year. On Monday, its value was around $16,500, as reported by CoinDesk. Experts predict it could drop to under $10,000.

The second most valuable cryptocurrency, Ether, is also struggling. According to data compiled by CoinDesk, its value dropped to around $1,230 on Monday, down more than 20% from the previous week.

The fall comes as investors still try to make sense of the shocking implosion of FTX, a once-dominant player in the market.

The collapse of the investment bank Lehman Brothers in 2008 sent shockwaves around the world, and some in the industry have speculated that this may have been the “Lehman moment” triggered by the company’s demise.

The incident has not only shattered trust in the cryptocurrency sector but also emboldened authorities around the world to crack down. Some of the most prominent figures in the industry have stated that they welcome the scrutiny if it will lead to greater public trust in the sector as a whole.

On Monday, CZ, as he is commonly known, addressed a gathering in Indonesia. A week ago, he said it’s “probably an accurate analogy” to draw parallels between the current crypto turmoil and the global financial crisis of 2008.

Earlier in the week, Binance and FTX had come to an agreement to try and save the exchange, but that deal quickly fell through.

After declaring bankruptcy last Friday, FTX’s fortunes have only worsened since then. Another industry heavyweight has come forward with admissions of financial mismanagement, further unsettling investors.

The Bahamas Police Conduct A Criminal Investigation

Last year, FTX relocated its headquarters from Hong Kong to The Bahamas, with former CEO Sam Bankman-Fried praising the country as “one of the few places to set up a comprehensive framework for crypto.”

The implosion of the company has been linked to criminal activity, according to authorities in The Bahamas, who announced their investigation on Sunday.

The Bahamas Police Conduct A Criminal Investigation

The Royal Bahamas Police Force said in a statement, “In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd.

, a team of financial investigators from the Financial Crimes Investigation Branch is working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred.”

Authorities are looking into the rapid collapse of FTX, but it is unclear what exactly they are looking into.

Bankman-Fried, the exchange’s 30-year-old founder and a prominent figure in the cryptocurrency industry, amassed a $25 billion fortune that vanished. After the May collapse of the TerraUSD stablecoin, he had been seen as the crypto world’s white knight, coming to the aid of companies in trouble.

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With funding from heavy hitters like BlackRock and Sequoia Capital, FTX shot up to become one of the largest cryptocurrency exchanges in the world.

The Wall Street Journal reported on Thursday that the collapse was caused by Bankman-Fried’s decision to lend billions of dollars worth of customer assets to fund risky bets by Alameda, his crypto hedge fund.

Containment Breach

The bankrupt exchange announced its own investigation the day before the Bahamas probe began.

On Saturday, FTX announced it was investigating possible crypto asset theft. As reported by Elliptic, a crypto risk management firm, $473 million worth of FTX crypto assets has apparently been stolen.

Containment Breach

Legal counsel for FTX, Ryne Miller, said on Saturday that the company had taken “precautionary steps” by taking all of its digital assets offline the previous day. Due to the discovery of fraudulent activity on Friday night, the procedure was sped up.

Miller stated that FTX was “investigating abnormalities related to the consolidation of FTX balances across exchanges” in regard to crypto wallet activity.

The details are still sketchy, but he promised that the company would release an update as soon as possible.

Warning From Binance About Accidental Transfers

Singapore-based Crypto.com admitted to sending over $400 million in ether to the wrong account, just as the crypto industry’s major players are coming under increased scrutiny.

Chief Executive Officer Kris Marszalek revealed on Sunday that 320,000 ETH were sent to a corporate account at rival exchange Gate.io three weeks ago, rather than to one of its offline, or “cold,” wallets.

Warning From Binance About Accidental Transfers

Despite the fact that the money was recovered, users are leaving the platform out of concern that it will also fail like FTX.

Sunday, Marszalek tweeted, “We have since strengthened our process and systems to better manage these internal transfers.” According to CoinDesk, the native token of the platform has dropped by more than 20% in the last 24 hours.

On Monday, Marszalek said that his company has been a “responsible, regulated player since inception” and that they will soon “prove all the naysayers…wrong with our actions.”

He also noted that Crypto.com’s business model is “completely different” from FTX, despite the fact that the site serves 70 million users worldwide.

“We never took any third-party risks, we do not run a hedge fund, and we do not trade customer assets,” he said.

Marszalek promised that the company would soon release an audited report detailing its financial reserves.

Zhao, the CEO of Binance, sent a message at the Bali conference that regulation of the industry would be difficult.

Officials’ “natural response is to borrow regulations from traditional banking systems… but crypto exchanges operate very, very differently from banks,” he said.

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“It is very, very normal for a bank to move user assets for investments and try to make returns,” he said. It is “almost guaranteed to go down,” he said if a cryptocurrency exchange operates in such a way. the industry as a whole had a responsibility to safeguard customers, he added.

Last words

Although FTX has a registered address in the Bahamas, the company is run from the United States, specifically Chicago and Miami.

It’s a marketplace for buying and selling cryptocurrency. All cryptocurrencies share the same fundamental structure as bitcoin: a publicly accessible “blockchain” that records ownership without a central authority.

Most cryptocurrency trades on the planet are processed by FTX and its main competitor, Binance, making FTX a very large and consequential company.

The cryptocurrency equivalent of an offshore gambling den, FTX, and Binance are both “international” exchanges.

Although each firm has a US-regulated outlet that strictly adheres to what little regulation there is in the US, the vast majority of the money that passes through their books is effectively unrestricted by regulatory requirements.

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Karan Siradi

I am an author and a public speaker. I was born in India and have travelled to many different countries. I have a masters in public communication from California University and I love to write about famous peoples from different industries.

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