Several frauds and inadequacies in the crypto sector have occurred within the year. Hackers allegedly stole Bitcoin from the FTX account after signing for bankruptcy.
Crypto stocks short sellers are turning a tidy profit in the wake of Sam Bankman-Fried's FTX debacle. That's according to a recent BanklessTimes report. The site has presented data indicating that crypto shorting investors are up 89.58% after the crypto exchange’s collapse.
FTX's announcement that it had filed for bankruptcy on 11th November sent ripples through the crypto market. Bitcoin fell 4% to its lowest in two years, reaching lows of $15,586.94. Similarly, Ether, the second leading digital asset, shed 8% of its value, going to a low of $1,081. 56. Other crypto suffered varying degrees of losses too.
Jonathan Merry, the CEO of BanklessTimes, spoke, "The crypto market has entered a tumultuous cycle due to the insolvency of the failed crypto exchange FTX. Cryptocurrencies are a volatile investment, and short sellers thrive on this volatility to make gains. The uncertainties that FTX’s fall brought on the crypto market created the perfect opportunity for them to profit."
Instabilities and Frauds Have Rocked the Crypto Industry
Besides the demise of FTX, this year has seen several other eruptions and frauds in the crypto industry. The unbelievable tales of worthless tokens masquerading as assets, the unanticipated withdrawal of billions of dollars in cash before declaring bankruptcy, the fraudulent halo surrounding Sam Bankman-Fried (AKA SBF), and FTX's total lack of structure or organization have sent shockwaves throughout the world.
Following FTX's downfall, the mood in the sector has worsened even further, as the firm was seen as having a steady presence.
Bitcoin's price has fallen from roughly $69,000 to less than $17,000 in the past year. Bitcoin's price movement is widely used as a barometer of emotion in the crypto market.
Similarly, crypto-focused stocks have taken a sound beating. For instance, MicroStrategy's stock price is down 70% from where it was at the beginning of the year. Likewise, Silvergate and Coinbase are down over 80%. Also dwindling is the optimism of Wall Street experts on the stock.
That said, the FTX-inflicted chaos largely left traditional U.S. stocks unaffected. They traded upwards on the back of softer-than-expected inflation data, which gave investors hope.
FTX's Fall
The failure of TerraUSD earlier this year had a domino effect on several enterprises. It contributed to the collapse of a significant hedge fund, Three Arrows Capital.
Like TerraUSD, FTX's fall will likely have a ripple effect on the exchange’s affiliated companies.. Hackers preyed on the firm and stole about $477 million worth of crypto assets. FTX has acknowledged that "unauthorized transactions'' took place. However, they have not provided information on the amount of money stolen.
