Crypto collapse: it’s looking like a long, cold, contagious winter

By November 20, 2022Tech

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By Verge Staff
On January 1st of 2022, one Bitcoin would cost you about $46,000. By November 8th, that same coin went for about $18,500. And that’s when the year’s most dramatic crypto story was just starting: the ongoing collapse of the FTX exchange, which brought yet another round of existential threats to the crypto industry as a whole.
This year has looked like death by a thousand scandals for crypto. There was the Luna / Terra crash, which wiped out billions in value practically overnight. There was Axie Infinity, the once-hot NFT game that lost $625 million in a hack and has struggled to recover. Celsius collapsed. Three Arrows Capital collapsed. Remember when NFTs were cool and people thought their JPGs were worth millions?
All this happened, of course, as the overall economy began to crash back down to earth after a pandemic-created spike in stock prices — which also dampened society’s overall tolerance for chaotic, nonsensical gambling on internet money. As the economy began to even out and our collective risk tolerance went down, crypto went for many investors from a fun plaything to a dangerous bet.
Crypto has crashed before, and as ever, the HODLers are saying there’s upside left to come. But right now, the future for cryptocurrencies of all kinds looks pretty bleak.
Nov 19, 2022, 12:43 AM UTCJay Peters
The now-collapsed cryptocurrency exchange FTX raised $420 million in a big funding round in October 2021, but $300 million of it went to founder Sam Bankman-Fried, according to The Wall Street Journal.
He apparently sold some of his stake in FTX to get that much, but it still meant he got a lot of money that investors probably wanted to go directly into the company.
[WSJ]
Nov 17, 2022, 6:34 PM UTCElizabeth Lopatto
In which the Enron guy says FTX is worse than Enron and other legal matters
Nov 17, 2022, 3:15 AM UTCRichard Lawler
Where is Sam Bankman-Fried? We know the 30-year-old former crypto boss “fucked up,” but where did FTX’s billions actually go?
We don’t know the answers to those questions, but wherever he is, he’s still tweeting, letting us know that he thought unsolicited DMs sent to a Vox reporter would remain confidential under the legal principle of the frieNDA.
(Feel free to keep track of the creeping crypto contagion in our feed right here.)
Nov 16, 2022, 10:00 PM UTCRichard Lawler
With FTX’s founder and former CEO steadily tweeting away and apparently DMing with Vox reporters (despite a precarious legal status as his former firm attempts to declare bankruptcy), John Ray, the new CEO of FTX, has an important message to share.
Nov 16, 2022, 8:59 PM UTCElizabeth Lopatto
Apparently Alameda took huge losses when Luna went down, and sloppy accounting prevented Bankman-Fried from realizing how bad it was. Also, his meetings with regulators were “PR.”
[Vox]
Nov 16, 2022, 8:33 PM UTCEmma Roth
Genesis says an influx of withdrawal requests ‘exceeded’ the brokerage’s ‘current liquidity’ following FTX’s collapse last week.
Nov 16, 2022, 7:49 PM UTCJay Peters
The esports organization TSM no longer wants to be affiliated with the collapsed cryptocurrency exchange.
Nov 16, 2022, 6:34 PM UTCElizabeth Lopatto
Hey, remember yesterday, when I said Changpeng “CZ” Zhao had painted a target on his exchange, Binance, by helping topple FTX?
Well, the Republican who’s most likely to lead the House Financial Services Committee told The Block that Binance’s role in the debacle will be part of a hearing in December.
[The Block]
Nov 15, 2022, 9:56 PM UTCElizabeth Lopatto
New job perk just dropped: a “career coach” who also serves as the personal therapist for a large swath of the company. From Vice:
In his telling, Lerner worked for FTX not exactly as a therapist and certainly not as a doctor, but as a coach, even as he maintained independent doctor-patient relationships with about 20 employees and prescribed medication to at least some of them.
In this capacity, Lerner said, he was focused on the well-being of the company’s employees, not only concerning himself with their careers, but their personal (and even dating) lives, at times searching out potential “dating options” for company employees in the Bahamas in order to keep them at the company without relying on in-office romance.

[vice]
Nov 15, 2022, 6:08 PM UTCElizabeth Lopatto
I feel like I’ve been saying “yikes” a lot, but it is my general sentiment about this whole thing. If you’re affected by BlockFi or FTX and want to talk, I’m liz@theverge.com, and I want to hear from you.
[WSJ]
Nov 15, 2022, 2:24 PM UTCRichard Lawler
Sure, it might sound like a bad idea to invest in a bankrupt exchange with more accusations of fraud than anything else we’ve seen on this side of Enron, but the Wall Street Journal reports Sam Bankman-Fried is asking around anyway.
Mr. Bankman-Fried, alongside a few remaining employees, spent the past weekend calling around in search of commitments from investors to plug a shortfall of up to $8 billion in the hopes of repaying FTX’s customers, the people said. 
In Mr. Bankman-Fried’s case, the funds aren’t meant to sustain a bare-bones staff, but to repay individual traders and institutional clients who have been unable to get funds out, the people said.
[WSJ]
Nov 14, 2022, 5:13 PM UTCEmma Roth
The CEOs for Binance and Crypto.com are suddenly emphasizing transparency, starting with some open online chats.
Nov 13, 2022, 6:57 PM UTCEmma Roth
Team SoloMid (TSM) is another organization that’s reevaluating its relationship with FTX following the exchange’s sudden collapse, stating on Twitter that it’s “consulting legal counsel to determine the best next steps.”
The esports team became officially known as TSM FTX after it struck a $210 million sponsorship deal with the company last year. The Miami Heat and the Mercedes Formula 1 team have already ended deals with the fallen firm.
Nov 13, 2022, 4:26 PM UTCEmma Roth
Crypto.com CEO Kris Marszalek says the company mistakenly sent 320,000 in Ethereum to another cryptocurrency exchange about three weeks ago.
Nov 13, 2022, 1:44 PM UTCEmma Roth
On Friday, the bankrupt FTX said it started facilitating withdrawals for its clients in the Bahamas (where the company’s based) at the request of “Bahamian HQ’s regulation and regulators.”
But the Securities Commission of The Bahamas says that’s not the case, stating it never “directed, authorized or suggested… the prioritization of withdrawals for Bahamian clients.” Meanwhile, hundreds of millions of dollars are still missing from the exchange.
Nov 12, 2022, 8:46 PM UTCEmma Roth
After pausing client withdrawals just a couple of days ago, now BlockFi is shutting off its credit card. In an email sent to customers, it says it’s suspending “purchasing privileges” on the BlockFi Rewards Visa card “in light of recent developments at BlockFi,” but didn’t elaborate any further.
Nov 12, 2022, 8:12 PM UTCEmma Roth
The bankrupt cryptocurrency exchange moved users’ funds to cold storage after at least $473 million went missing from the platform.
Nov 12, 2022, 1:45 PM UTCEmma Roth
After FTX filed for bankruptcy on Friday, the Miami Heat announced that it’s terminating its partnership with the company, which acquired the naming rights to its basketball stadium last year.
The stadium will still be known as the FTX Arena when the Heat faces off against the Charlotte Hornets on Saturday (and probably for the foreseeable future) while the team looks to secure a new sponsorship deal.
Nov 11, 2022, 11:43 PM UTCRichard Lawler
The crypto exchange will have a new CEO as it attempts to pay back creditors, customers, and investors.
Nov 11, 2022, 9:31 PM UTCMitchell Clark
Major crypto enterprises are rushing to assure customers that their funds are safe. But are they actually releasing proof — or just data?
Nov 11, 2022, 6:35 PM UTCAdi Robertson
One of the funniest parts of this week’s FTX meltdown was learning that CEO Sam Bankman-Fried apparently blew investors’ minds by playing League of Legends during a meeting.
It was first reported as a bit of gee-whiz startup mythmaking, and in the tradition of Kyle Orland’s brilliant investigation into Travis Kalanick’s Wii Tennis prowess, FT does the vital job of puncturing it by running down his actual history with the game. Turns out he’s a middling-to-bad player and doesn’t really deny it — which is fair! But maybe not a sign of unique genius.
[Financial Times]
Nov 11, 2022, 2:35 AM UTCRichard Lawler
As first reported by The Information, crypto exchange Coinbase is adding to the 1,100 or so people it let go earlier this year with cuts to two other teams.
As confirmed in a statement from the company, they affect the recruiting and institutional onboarding groups, which are shrinking by about 60 people in total.
Coinbase CEO Brian Armstrong tweeted this week that the company isn’t affected by the ongoing FTX flameout and doesn’t engage in that kind of “risky behavior.”
[The Information]
Nov 11, 2022, 1:36 AM UTCElizabeth Lopatto
The “lack of clarity” around FTX and Alameda means BlockFi can’t operate as usual, the company says. The company had just launched a new crypto yield product three days ago.
Nov 11, 2022, 1:01 AM UTCMitchell Clark
The Consumer Financial Protection Bureau has put out a report full of data about the rise of crypto scams and other problems, which is chock-full of examples.
Nov 10, 2022, 7:37 PM UTCElizabeth Lopatto
So remember when FTX was going to get bought by Binance, except whoopsie, Binance did due diligence for a couple hours and noped out?
US authorities would like to know what Binance saw.
[Coindesk]
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