This week in pieces: Bitcoin avoids heavy losses as FTX contagion spreads

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This week in parts. Illustration by Mitchell Preffer for Decrypt.

This is the second week in FTX disaster history, crypto investors can expect things to get worse before they get better. However, the two market leaders, Bitcoin and Ethereum, no longer seem to be in free fall.

Bitcoin (BTC), the largest cryptocurrency by market capitalization, has fallen just 1% over the past week and is trading at $16,655. Ethereum (ETH), the No. 2 cryptocurrency, has reduced its value by around 4% and is trading for $1,210 at the start of the weekend.

Both appeared to rebound on Tuesday after new data from the latest PPI (producer price index) report from the US Department of Labor showed a drop in the cost of goods excluding food and energy. Many took it as a sign that US inflation might finally subside. down, which would encourage the Federal Reserve to ease its tight fiscal policies. Stocks also rebounded on the news.

Several leading cryptocurrencies lost between 5% and 10% in value this week, including Cardano (ADA), Polygon (MATIC) and popular coins Dogecoin (DOGE) and Shiba Inu (SHIB).

The biggest loser among the top twenty cryptocurrencies by market capitalization was Solana (SOL), which fell 17% to $13.31. FTX was an early backer of Solana and the entire Solana ecosystem is affected by the implosion; the blast radius included layoffs to the Solana NFT Metaplex protocol.

The full extent of Solana Networks’ ties to collapsing multi-billion dollar crypto empire Sam Bankman-Frieds was revealed this week, along with claims of exposure to FTX by several other leading companies in the world. sector.

The FTX contagion is spreading

As prices stabilized this week, there were a series of revelations within the industry as companies stepped forward to declare the extent of their exposure to FTX bankrupt.

On Monday, crypto lender BlockFi denied claims that the majority of its assets were tied to FTX, but told clients withdrawals would remain paused, citing significant exposure to the exchange’s collapse. BlockFi had suspended customer withdrawals last week. The company is also considering filing for Chapter 11 bankruptcy, the decryption report confirmed, and is likely facing imminent layoffs.

Crypto hedge fund Ikigai confessed to having a large majority of its total assets tied to FTX, in a tweet from founder Travis Kling. Kling also apologized for investing client funds in FTX and actively supporting it.

The Solana Foundation published a blog post revealing that it had $1 million in cash or equivalent assets locked in FTX. Additionally, the foundation holds 3.24 million common shares of FTX Trading LTD, 3.43 million FTT tokens and 134.54 million SRM tokens of the decentralized exchange Serum. Bankman-Fried co-founded the Solana-based DEX in 2020.

The Foundation’s disclosure also clarified the extent to which Bankman-Fried had invested in the networks token. FTX and Alameda had together purchased 50.5 million SOL, with a current value just south of $666 million.

On Tuesday, crypto-centric investment firm Sino Global revealed in an official statement that it had seven-figure exposure to FTX, but continues to operate as normal.

Crypto exchange Liquid Global on Tuesday froze all withdrawals, including fiat, in accordance with the requirements of voluntary Chapter 11 procedures in the United States. Liquid Group and all of its subsidiaries, including the Japanese Quoine Corporation and Quoine Pte. in Singapore, were acquired by FTX Trading Ltd in an undisclosed deal earlier this year.

USDC stablecoin issuer Circle confessed in a regulatory filing that the tiny stock position in FTX that CEO Jeremy Allaire alluded to immediately after FTX’s collapse amounted to a $10.6 million investment. . The filing says Circle expects its financial performance to be materially worse than projections made last February.

On Wednesday morning, leading crypto broker Genesis announced to clients that it would suspend withdrawals from its lending arm, citing “unprecedented market turmoil” following the FTX bankruptcy. Just a week prior, the company tweeted, “Our operating capital and net positions in FTX are not material to our business. Circumstances surrounding FTX have not impeded the full operation of our business franchise.”

Even blockchain analytics firm Chainalysis, in filings with the Delaware bankruptcy court, has been identified as an FTX creditor and owes money in the bankruptcy proceedings.

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