FTX implosion: Crypto’s value should not be quoted in dollars
FTX was quoted with a value of US$32 billion before it declared bankruptcy – but it was worth 32 billion of its own tokens, not dollars. Customers are likely to lose all assets they hold there
CRYPTO proponents have been saying things like: “How can you trust the banks?” With schadenfreude, crypto sceptics can now reply: “How can you trust the crypto exchanges?”
Following the Terra-Luna collapse in the summer, we have had another implosion with much wider ramifications. FTX, the second-largest crypto exchange in the world, last week declared bankruptcy after a stunning turn of events.
FTX’s collapse was precipitated when Binance, the largest crypto exchange, announced that it would sell all of its 23 million FTT tokens due to “irregularities” it discovered in FTX – which at the time were worth around US$529 million, thereby exposing a massive hole in FTX’s balance sheet and causing it to become insolvent. When it became clear that most of FTX’s assets were its own FTT token, people started questioning the solvency of the business.
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