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The debacle of FTX, one of the main cryptocurrency exchanges, could result in losses of tens of billions of dollars for the clients of this “exchange”. The company is bankrupt, its founder, US billionaire Sam Bankman-Fried has resigned, and activities are stalled, although it appears that suspicious movements worth at least $ 1 billion have occurred in the past few hours, according to Reuters news agency. .
This Friday, November 11, the American company FTX, one of the most important exchanges for cryptocurrencies stayed in the Bahamas, filed for bankruptcy. Its founder, the young American billionaire Sam Bankman-Fried has resigned. In turmoil for a week, FTX drags about 130 companies that have worked with it into its downfall. It is not yet known whether savers who had accounts with FTX will be able to recover their assets. Losses could run into billions of dollars.
From Lagos to San Francisco, from Paris to Nairobi, this failure is shaking cryptocurrency owners. Bitcoin, already battered for almost a year, has lost almost a quarter of its value in a few hours following the failure of FTX.
Risk of a crisis of confidence among savers
The crisis is first of all a crisis of confidence that risks freezing savers who speculated on cryptocurrencies. For David Nataf, president of the AFRO foundation, a Pan-African cryptocurrency, consumers must now choose the vehicles in which to invest more seriously. There are over eight thousand cryptocurrencies and not all are the same.
” The currencies that will survive are likely to be currencies “why”, he explains. A cause like pan-Africanism, a cause like karat for diamond traders. We will also try to find currencies to be able to collateralize commodities. In commodity trading, it is not normal to have to stock a quantity of gold before delivery. So the “cause” currencies will be able to survive and purely speculative currencies will tend to disappear. “
As for exchanges, the FTX debacle showed that they needed to be monitored more. Giants like Binance, which controls 40% of transactions, or Coinbase, one of its challengers, sincerely swear that their practices are healthier than FTX’s and that their customers’ assets are not at risk.
The descent into hell continues for FTX
The descent into hell is not over for FTX and its leaders. Not only did resigning founder Sam Bankman-Fried see his personal fortune drop from $ 16 billion to zero in a matter of hours. But his FTX company is now insolvent and is in danger of becoming toxic to the entire industry.
The doubts about the quality of its management expressed a week ago by its competitor Binance take even more relief as FTX spotted a series of unauthorized movements last night. Funds theoretically frozen by the bankruptcy procedure have disappeared. According to Reuters, this is at least a billion dollars withdrawn from customer deposits. FTX does not confirm the amounts, but announces that it has secured its funds offline to protect them.
Hacking or manipulation? The rumors are spread. The FTX debacle is dealing a severe blow to the cryptocurrency industry. The FTX case will also give arguments to monetary authorities around the world who have been trying to better regulate the sector for some years. The monetary Wild West no longer inspires confidence.
Cryptocurrencies, a poorly regulated sector
Cryptocurrency is freedom. This is the slogan we have most often heard from the mouths of their promoters. They were born in the aftermath of the 2008 financial crisis as a reaction to the traditional financial system which, due to its inconsistency, had plunged the world into turmoil.
But from freedom to anarchy, the line is sometimes blurred and the multiple crises the industry has experienced since producing billions of dollars show that some form of regulation has become necessary. However, major central banks tend to confuse regulation with witch hunts. What drives trading companies, exchanges, to expatriate as FTX did in tax havens like the Bahamas.
” We need clear and non-punitive legislation. However, we are in ex nihilo punishment. There is a bad reputation (cryptocurrency editor’s note). At first glance, there is a hint of opacity. From there, we have exchanges that will settle in unclear jurisdictions. It is because there is no jurisdiction that has today put in place clear legislation adapted to this new matter. », Estimates David Nataf, president of the AFRO foundation, a Pan-African cryptocurrency.
Contrary to popular belief, the cryptocurrency industry is not against regulation. But it is struggling to emerge in the United States and Europe. China, meanwhile, has made a radical choice by now banning transactions related to cryptocurrencies.