Crypto Markets Dive As FTX Files For Bankruptcy

Key Insights

• Crypto markets are under pressure as FTX filed for bankruptcy protection. 
• The filing includes FTX.com, FTX US, and Alameda Research.
• FTT, the native token of the FTX exchange, settled near the $2.20 level. 

FTX Filed For Chapter 11 Protection

Crypto markets moved lower after FTX announced that it would file for bankruptcy protection. The Chapter 11 filing includes FTX.com, FTX US, and Alameda Research.

Sam Bankman-Fried resigned as CEO and will remain to assist an orderly transition. He will be replaced by John J. Ray III. Mr. Ray noted: “The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize reсoveries for stakeholders.”

It should be noted that Sam Bankman-Fried has previously said that FTX US was 100% liquid. However, the company is included in the Chapter 11 filing, which means that it was also impacted by the recent events.

Bitcoin Settled Back Below The $17000 Level

Not surprisingly, FTX bankruptcy had a negative impact on crypto markets. Bitcoin managed to settle below the $17000 level. Ethereum moved below $1250, while XRP declined towards $0.37. Solana, which has been under serious pressure due to its relationship with FTX, is currently trading near the $16.00 level. FTT, the native token of the FTX exchange, has settled near the $2.20 level.

Traders fear that FTX problems will lead to financial contagion. These worries have already materialized as crypto lender BlockFi paused withdrawals from the platform. BlockFi noted: “Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual.” This statement was made before FTX filed for bankruptcy.

Obviously, market participants are worried that other firms, which have been connected to FTX and Alameda, may face problems, leading to forced liquidations of their crypto assets.

In the longer-term, stricter regulation is the key risk for the crypto industry. As FTX filed for Chapter 11 protection, the details of the FTX crash will soon be known. While stricter regulation may ultimately lead to wider crypto adoption, it will certainly put pressure on many existing crypto projects.