FTX exchange collapses sending "seismic" shockwaves throughout the crypto industry

[Cal Jeffrey]

Ouch! Crypto exchange FTX suffered an almost complete implosion falling 85 percent today and a full 90 percent since last week's high of $25.78. The collapse follows allegations that Binance was backing out of a merger deal and the opening of an FTC investigation into FTX mishandling withdrawal requests. The token is now worth less than $3.

Cryptocurrencies continued to tumble on Wednesday as the FTX exchange implodes. Crypto billionaire Sam Bankman-Fried's trading platform experienced what is commonly referred to as a "bank run" after the US Federal Trade Commission announced it had opened an investigation into whether FTX Trading illegally handled customer withdrawals earlier in the week.

A bank run is when a large number of depositors go to take their money out of a bank. It usually happens when people think the institution is about to go insolvent. Since most of a bank's money only exists on paper and is not sitting in the local vault, most depositors looking to withdraw funds walk away empty-handed, further feeding the panic.

In Bankman-Fried's case, the FTC alleges he loaned out investors' FT tokens (FTT) to other crypto lenders like BlockFi and Voyager Digital. He additionally struck several advertising deals with sports teams and athletes to promote FTX.

Forbes notes the shakeup caused a ripple effect that saw Bitcoin value fall 10 percent on Tuesday and another seven percent Wednesday to $17,056 — a two-year low. Bitcoin has continued its fall since this morning's low and sits at $16,034.70 as of this writing, more than $5,000 lower than it was trading a week ago.

Before the scare, rival exchange Binance was reportedly in talks to merge with FTX but backed out of the deal. In response, Binance CEO Changpeng Zhao often referred to as just CZ, issued a tweet containing a memo he sent to all Binance employees.

According to CZ, Binance had nothing to do with FTX's crisis. He emphasizes that this was not some "master plan" to back out of the deal. Due diligence is still underway, indicating that the agreement is not canceled, despite what CoinDesk's "anonymous sources" say.

"DO NOT trade FT tokens. If you have a bag, you have a bag. DO NOT buy or sell," CK advised.

Probably a wise decision considering the coin has nowhere to go but up or out. Bankman-Fried's FTT dropped seven percent, on Wednesday. Tokens were holding relatively steady last week, hovering at around $25. As of publication, the tokens are valued at $2.50, a 90-percent freefall. Selling at this time would virtually be a total loss unless you invested way back in September 2019 when it was trading for under $2.

The repercussions were also felt throughout the rest of the sector. Ethereum slid nine percent on Wednesday and is 30 percent lower than a week ago. Stock in Coinbase dumped 18 percent of its valuation in the last two days nearing an all-time low.

"Bernstein analysts called the dip a result of a 'seismic shift' in the industry," Forbes noted.

Permalink to story.

https://www.techspot.com/news/96611-ftx-exchange-collapses-sending-seismic-shockwaves-throughout-crypto.html

 

[VitalyT]

The financial pyramid collapses, at last, as they all do, sooner or later.

Bitcoin shed over $5,000 in valuation since last week

Actually, it is just about $6,000 now, and more to come. It is around 15.5k now.

All important support lines have been broken, and the next one is at 10k, and so probably to be seen soon, possibly very soon, by the looks of things.

 

[kiwigraeme]

The financial pyramid collapses, at last, as they all do, sooner or later.

Actually, it is just about $6,000 now, and more to come. It is around 15.5k now.

All important support lines have been broken, and the next one is at 10k, and so probably to be seen soon, possibly very soon, by the looks of things.

Bitcoiners will be all encouraging each other - great time to buy - not sure how this ponzi scheme - will get volume sales to push it up now

 

[yRaz]

Bitcoiners will be all encouraging each other - great time to buy - not sure how this ponzi scheme - will get volume sales to push it up now

Is bitcoin a bad buy? Yes! Is bitcoin a ponzi scheme? No.

I absolutely hate it how many people say Bitcoin is a ponzi scheme because it shows how little education the general public has about personal finance.

 

[kiwigraeme]

Is bitcoin a bad buy? Yes! Is bitcoin a ponzi scheme? No.

I absolutely hate it how many people say Bitcoin is a ponzi scheme because it shows how little education the general public has about personal finance.

Yes it is technically not a ponzi scheme - but has aspects of it - it's only worth is what future buyers give it. The original BC is limited in number - for these wild speculations 1 BC would hit 1 million or even $100 000 - you need even more and more funds to buy in a significant volume - and that you can sell it easily at that price ( I don't believe the capital cap is realistic ) . Even if low volume it hits $200 000 each - if there is a run - there are no buyers so could tank straight back to $15000
There is a trust element - in a ponsi scheme you hope to get in early and sell high.
TBF - lots of small BC holders seem to believe in it - The big guys who own over 50% have washed/controlled the market to their benefit - pump , sell, buy , pump... etc

 

[tkabou]

Bitcoiners will be all encouraging each other - great time to buy - not sure how this ponzi scheme - will get volume sales to push it up now

51% of BTC volume are illegal wash sales through bots (buy-sell-buy-sell, rinse and repeat), that’s how they prop up the price. Newsbtc had an article about it a few weeks ago by some company that did a 6-month research into it. At the time of writing, BTC was around 19-20K and the article pointed out, that if the fake volume was removed BTCs price would be around 12K. I presume now it would be around 8-10K.

 

[takaozo]

Great news, now how we can persuade more people to buy now, so they can lose their money in this great "crypto industry".

industry = group of productive enterprises or organizations that produce or supply goods, services, or sources of income.

 

[umbala]

Is bitcoin a bad buy? Yes! Is bitcoin a ponzi scheme? No.

I absolutely hate it how many people say Bitcoin is a ponzi scheme because it shows how little education the general public has about personal finance.

I absolutely hate it how many people think Bitcoin is some genius personal finance plan that will magically generate them money out of nothing. Explain to us where the value of Bitcoin comes from exactly, because obviously we're not as smart as you are.

From what I can see there is nothing backing Bitcoin, no products, no services, nothing. The only way to make money from Bitcoin is to find an even bigger sucker than yourself who's willing to pay an even higher price than you did. The problem with this scheme is that at some point you reach the "sucker saturation point" the point where no one else is dumb enough to pay an even higher price and then the whole thing starts to collapse.

Sure, the true believers who have everything invested in the scheme will make a lot of noise and try to prop it up, but the writing's on the wall and we all know where all this is headed.

 

[emmzo]

Is bitcoin a bad buy? Yes! Is bitcoin a ponzi scheme? No.

I absolutely hate it how many people say Bitcoin is a ponzi scheme because it shows how little education the general public has about personal finance.

"Little education of the general public"? Lol. Sry, sir, you must have a master degree in economics. But what is a Ponzi scheme, exactly? The believe in the success of a non existent enterprise, foster by the payment of quick returns, where existing investors collect funds from new investors. If that's not Bitcoin, I don't know what it is. There is zero intrinsic value, where investors need to sell it further to make money. When nobody buys anymore, it collapses. You could argue about certain technicalities, but if it walks like a duck...

 

[R00sT3R]

Great news & terrible news in one article.

Great news = that so many parasite scum miners have lost it all.

Terrible news = that collapses like this usually turn out to be the bottom of the next artificially manufactured crypto boom, only visible a year or two down the road.

Any sketchy scheme shown to make vast profits from nothing, always resurfaces at some point.

 

[Puiu]

"According to CZ, Binance had nothing to do with FTX's crisis. "

Ah yes, destroying FTX wasn't the goal, they just helped along the way
I have to admit, it was an incredibly simple but smart and effective plan. Binance managed to snag FTX for pennies.

 

[yRaz]

Yes it is technically not a ponzi scheme - but has aspects of it - it's only worth is what future buyers give it. The original BC is limited in number - for these wild speculations 1 BC would hit 1 million or even $100 000 - you need even more and more funds to buy in a significant volume - and that you can sell it easily at that price ( I don't believe the capital cap is realistic ) . Even if low volume it hits $200 000 each - if there is a run - there are no buyers so could tank straight back to $15000
There is a trust element - in a ponsi scheme you hope to get in early and sell high.
TBF - lots of small BC holders seem to believe in it - The big guys who own over 50% have washed/controlled the market to their benefit - pump , sell, buy , pump... etc

So is ANY investment fund or people telling you to invest in the stock market or any asset, such as real-estate, gold, pork belly futures, tulips

I absolutely hate it how many people think Bitcoin is some genius personal finance plan that will magically generate them money out of nothing. Explain to us where the value of Bitcoin comes from exactly, because obviously we're not as smart as you are.

From what I can see there is nothing backing Bitcoin, no products, no services, nothing. The only way to make money from Bitcoin is to find an even bigger sucker than yourself who's willing to pay an even higher price than you did. The problem with this scheme is that at some point you reach the "sucker saturation point" the point where no one else is dumb enough to pay an even higher price and then the whole thing starts to collapse.

Sure, the true believers who have everything invested in the scheme will make a lot of noise and try to prop it up, but the writing's on the wall and we all know where all this is headed.

Did you read LITERALLY the first sentence of my post?

"Little education of the general public"? Lol. Sry, sir, you must have a master degree in economics. But what is a Ponzi scheme, exactly? The believe in the success of a non existent enterprise, foster by the payment of quick returns, where existing investors collect funds from new investors. If that's not Bitcoin, I don't know what it is. There is zero intrinsic value, where investors need to sell it further to make money. When nobody buys anymore, it collapses. You could argue about certain technicalities, but if it walks like a duck...

ponzi scheme definition - Google Search

"a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors."


Bitcoin is a publicly traded asset, not an investment in which gives you consistent payouts based on the amount of money you initially invested.

Either you don't know what a Ponzi Scheme is or you don't know how Bitcoin works. Look up Bernie Madoff if you need more clarification.

 

[takaozo]

Bitcoin and crypto started more or less as an "utopia". The followers aka miners and investors used it as a Ponzi schema only after it took off.

 

[Theinsanegamer]

So is ANY investment fund or people telling you to invest in the stock market or any asset, such as real-estate, gold, pork belly futures, tulips

That's a bit disingenuous. When you buy literally any of the asets you just listed, you have an asset. Buying real estate, you now own the real estate. Gold is a precious metal that is considered valuable by most. Futures will eventually turn into stocks in a real item. With the tulip mania, you could maybe give it to a date and maybe get laid.

With crypto, you have.....nothing. Just the vague abstract interpretation of value. You cannot hold a bitcoin, you cant spend it at the store, it has no stake on any physical currency, it only has value if someone with even more money buys it at a profit. There is no coin, there is only a receipt on a block chain that says you have a coin.

Did you read LITERALLY the first sentence of my post?

ponzi scheme definition - Google Search

"a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors."

Bitcoin is a publicly traded asset, not an investment in which gives you consistent payouts based on the amount of money you initially invested.

Either you don't know what a Ponzi Scheme is or you don't know how Bitcoin works. Look up Bernie Madoff if you need more clarification.

Bitcoin is an unsecured ghost asset that is gambled on by a chain of greater *****s. There is no difference between a Bitcoin and one of china's traded ghost apartments.

 

[yRaz]

That's a bit disingenuous. When you buy literally any of the asets you just listed, you have an asset. Buying real estate, you now own the real estate. Gold is a precious metal that is considered valuable by most. Futures will eventually turn into stocks in a real item. With the tulip mania, you could maybe give it to a date and maybe get laid.

With crypto, you have.....nothing. Just the vague abstract interpretation of value. You cannot hold a bitcoin, you cant spend it at the store, it has no stake on any physical currency, it only has value if someone with even more money buys it at a profit. There is no coin, there is only a receipt on a block chain that says you have a coin.


Bitcoin is an unsecured ghost asset that is gambled on by a chain of greater *****s. There is no difference between a Bitcoin and one of china's traded ghost apartments.

Bitcoin is no different than a fiat currency. It is an abstract concept of wealth that people buy and sell. And the ups and downs are so high I see it no different than trading on margin with a brokerage.

I'm not telling people to buy bitcoin, don't buy crypto unless you understand the risks. Don't buy anything unless you understand the risks, but it's not a ponzi scheme.

If people need clarification about what a ponzi scheme is read about Bernie madoff.

 

[PEnnn]

The scam whose main objective was to help drug lords and terrorists launder money has collapsed, and the fools who bet their houses on it (and bought any GPU they could find at any price!) - are now whining it's not a scam!!

Yeah sure, either way, it's music to my ears.

 

[Theinsanegamer]

Bitcoin is no different than a fiat currency. It is an abstract concept of wealth that people buy and sell. And the ups and downs are so high I see it no different than trading on margin with a brokerage.

So, is it no different then a FIAT currency or is it a publicly traded asset? You cant have it both ways.

And last time I checked, I can go to the bank, withdraw my FIAT, and hold it in my hand. That is the exact opposite of abstract, it is a physical thing you can touch and hold. Can you withdraw your bitcoin?

I'm not telling people to buy bitcoin, don't buy crypto unless you understand the risks. Don't buy anything unless you understand the risks, but it's not a ponzi scheme.

If people need clarification about what a ponzi scheme is read about Bernie madoff.

You're right, its not a ponzi scheme.

It's a greater fool scheme. Bitcoin has value only because somebody else will buy it for a higher price.

 

[BSim500]

Bitcoin is no different than a fiat currency.

Bitcoin is very different to Fiat currency. "But, but, but, neither are on the gold standard" doesn't mean Bitcoin acts like a national currency at all. Genuine currencies need two things : 1. Short term stability (no high day to day volatility to actually give faith for native pricing), and 2. Liquidity for large scale national / global usage (no currency shortages when hundreds of millions of people actually use it and not just a few geeks on the Internet). A 3rd thing (3. long term value retention over decades / centuries (which Bitcoin enthusiasts are hung up on being their only measure of anything) is desirable but actually optional. Most national fiat currencies at least fulfill 1 & 2 even if they struggle with 3. Bitcoin has always failed miserably at 1 & 2 and since the collapse, all 3.

 

[Theinsanegamer]

Bitcoin is very different to Fiat currency. "But, but, but, neither are on the gold standard" doesn't mean Bitcoin acts like a national currency at all. Genuine currencies need two things : 1. Short term stability (no high day to day volatility to actually give faith for native pricing), and 2. Liquidity for large scale national / global usage (no currency shortages when hundreds of millions of people actually use it and not just a few geeks on the Internet). A 3rd thing (3. long term value retention over decades / centuries (which Bitcoin enthusiasts are hung up on being their only measure of anything) is desirable but actually optional. Most national fiat currencies at least fulfill 1 & 2 even if they struggle with 3. Bitcoin has always failed miserably at 1 & 2 and since the collapse, all 3.

Dont forget option 4: transaction time that takes a few seconds, not hours on end.

 

[Thatsdisgusting]

The only thing I'm worried about is... WHY THE LAST GEN GPU's STILL COST FREAKING >1000$?!

Mining crashed, crypto fell. What the hell they need else to fall?

 

[yRaz]

Bitcoin is very different to Fiat currency. "But, but, but, neither are on the gold standard" doesn't mean Bitcoin acts like a national currency at all. Genuine currencies need two things : 1. Short term stability (no high day to day volatility to actually give faith for native pricing), and 2. Liquidity for large scale national / global usage (no currency shortages when hundreds of millions of people actually use it and not just a few geeks on the Internet). A 3rd thing (3. long term value retention over decades / centuries (which Bitcoin enthusiasts are hung up on being their only measure of anything) is desirable but actually optional. Most national fiat currencies at least fulfill 1 & 2 even if they struggle with 3. Bitcoin has always failed miserably at 1 & 2 and since the collapse, all 3.

We see currencies change price all the time, it's why FOREX trading exists. They also do go basically to zero, just look at Venezuela.

And I don't get why you people are arguing with me about this, I'm telling you that bitcoin is bad, don't buy it. I'm just saying that it doesn't fit the definition of a ponzi scheme. We see high volatility in the markets ALL THE TIME. This is not something unique to bitcoin. just look at Meta, it's had percentage swings in price on par with bitcoin. Facebook is the perfect example of how investing in bitcoin is no different than investing in any other asset.

 

[Theinsanegamer]

We see currencies change price all the time, it's why FOREX trading exists. They also do go basically to zero, just look at Venezuela.

Funny you should mention that, a currency that was hyperinflated out of existence by incompetent leaders, the kind of thing that CONSTANTLY happens in cryptoland.

Are you sure that is the win you think it is?

And I don't get why you people are arguing with me about this, I'm telling you that bitcoin is bad, don't buy it. I'm just saying that it doesn't fit the definition of a ponzi scheme. We see high volatility in the markets ALL THE TIME. This is not something unique to bitcoin. just look at Meta, it's had percentage swings in price on par with bitcoin. Facebook is the perfect example of how investing in bitcoin is no different than investing in any other asset.

You keep insisting crypto isnt a ponzi scheme while forgetting that somebody is false trading huge amounts of bitcoin to drive the price up, and running all those bots trying to convince people to buy crypto. I wonder if somebody on top is trying to cash out and leave everyone else holding the bag? Kinda like a ponzi scheme?

And last time I checked facebook wasnt false trading 51% of its value every day. The blockchain doesnt lie bro. We can see how easily it is manipulated when someone wants to get out.

 

[BSim500]

We see currencies change price all the time, it's why FOREX trading exists. They also do go basically to zero, just look at Venezuela.

Mild fluctuations aside, currencies by definition are supposed to be stable, ie, not supposed to massively go down OR up. What people really want with crypto "investments" isn't a "currency" at all, it's a digital get-rich-quick scheme that they keep trying to justify as being some ideological world-saver (a 'replacement for evil gubmint fiat' currency') that simply isn't. This is why nothing (except ransomware) is priced natively in Bitcoins - it's priced in USD / EUR, etc, and the equivalent amount of BTC is accepted - everything falls apart when you do native pricing with massive day to day fluctuations.

Imagine being a baker seeing the price of a loaf of bread in Bitcoins change from 5 BTC to 0.005 BTC in the space of months when literally nothing about the demand for bread, bakery operating costs, supply of wheat, staff salaries, etc, has changed at all beyond 1% or so in that time. What are you "reflecting" there in the real world beyond hyper-deflationary Bitcoin bubble junk economics that's ended up completely divorced from reality? Absolutely nothing. The "values" that native Bitcoin pricing reflect are completely worthless vs actual real-world trade, which is why nothing is priced natively in Bitcoins (unlike actual currencies).

Nowhere is this more obvious than if you pretend fiat currencies, the USD, etc, don't exist at all and you try to price commodities (eg, wheat, oil, real estate, etc) directly and natively in Bitcoin and have the resulting "A barrel of oil is now priced several hundred times lower than what it cost to extract a barrel of oil due to Bitcoin's hyper-deflation" chart make any sense whatsoever vs normal supply & demand. People don't just want to see or understand why Bitcoin's intrinsic hyper-deflation is just as bad as hyper-inflation because "muh get rich scheme".

 

[wiyosaya]

Surprise! Surprise! The Ponzi scheme crashes.Who would have thunk it?

 

[Cal Jeffrey]

You're right, its not a ponzi scheme.

It's a greater fool scheme. Bitcoin has value only because somebody else will buy it for a higher price.

Hmmmm... Why does that sound so dang familiar? Can't quite remember the term, but I know it starts with N and ends with FT.