Crypto billionaires’ brawl sparks fears of new turmoil
After a few months of calm, crypto markets are again facing fears of the kind of turmoil that ravaged digital assets in May and June.
Bitcoin and other cryptocurrencies suddenly tumbled on Tuesday in Asia, driven by questions surrounding the balance sheet of Alameda Research, billionaire Sam Bankman- Fried’s crypto trading house. Investors kept pulling assets from FTX, the exchange Bankman- Fried also runs, and sent its native token FTT diving as much as 32percent.
The turbulence, triggered by rival Zhao “CZ” Changpeng’s decision to sell a roughly $ 530m holding of FTT coins, brought back memories of the contagion that ripped through crypto markets after the TerraUSD stablecoin collapsed in early May. That upheaval then gave way to months of unusual stability in cryptocurrencies — a lull that appeared to have ended this week.
Bankman- Fried, whose investments in troubled crypto firms in June led some to compare him to the legendary banker John Pierpont Morgan, has found himself trying to assuage investors, customers and counterparties. On Monday, he tweeted that “unfounded rumours” had been circulating and that FTX keeps audited financials.
“There are market players who smell blood and are adding to the downward price pressure,” said Cici Lu, CEO of blockchain consulting firm Venn Link Partners.
FTX appeared to have stopped processing withdrawals, the news and information service The Block reported on Tuesday, citing on- chain data, only to say moments later that they appeared to resume. FTX hadn’t responded earlier Tuesday to requests from Bloomberg for comment. Bankman- Fried had acknowledged slower- than- normal transactions over the weekend.
For Bankman- Fried, the stakes are suddenly very real. FTX saw a net outflow of $ 653m over a 24- hour period, research firm Nansen said on Tuesday morning. PeckShield, a blockchain security firm, said an unidentified “whale” had pulled $ 284m worth of Ether and stablecoins from FTX. The FTT token suffered its biggest intraday drop since May 2021.
So far, the market reaction has been far from as severe as during the depths of the summer swoon, when bitcoin touched a low of $ 17,560 in June. The largest token is still trading above that level. It was down 6.4percent at around $ 19,371 in New York.