Dear readers,
We hope you're doing well. What happened last week? Some people were following, some completely lost track. We lost track a bit too, but then we caught up again, and now we'll share it with you.
CoinMarketCap 's assessments, interesting events unfolded between FTX and Binance , two major cryptocurrency exchanges that hold the majority of market circulation , and the market was naturally significantly affected. FTX, headquartered in the Bahamas, had spent millions of dollars to create a crypto-friendly legal framework in the United States. Binance, which is not officially decentralized, was actually one of FTX's early investors.
Decentralized Bulletin: Understanding the FTX Scandal
Both companies started by operating within unconventional frameworks, shaking up the crypto world and becoming investors' favorite platforms. So why did everything suddenly go wrong?
Every exchange has a main token to collect transaction fees and, in fact, to be listed. Last year, Binance executive Changpeng Zhao sold his shares in FTX to the exchange's founder, or former owner, and received payment in FTT tokens for a portion of the proceeds.
Earlier this month, a leaked document reported by CoinDesk revealed that the Alameda Research fund, managed by FTX founder Bankman-Fried, held an unusually large number of FTT tokens. This raised questions about whether the fund manager was favoring his own company's main token . The financial link between the fund and the FTX exchange, despite them being separate entities, created unease.
In light of this leaked information and the ensuing unrest, Binance announced on November 6th that it would sell its FTT tokens. Immediately after this announcement, investors reacted quickly, collectively driving the token's price down rapidly. So, what was the result? Of course, a lack of liquidity .
Decentralized Bulletin: Liquidity Shortage
With so many people taking action to withdraw their investments, the amount withdrawn from FTX is estimated to be between $6 and $8 billion . FTX, in turn, struggled to meet this liquidity demand.
Last Tuesday, an announcement from Binance promised to be a solution to FTX's current difficulties. Binance stated that it would solve the liquidity shortage by acquiring the company . FTX founder Bankman-Fried added that this solution would ensure all investors' demands are met.
Just one day later, Binance reversed its decision and announced it would not be acquiring FTX, citing poorly managed funds and ongoing investigations as reasons . You may recall that months ago, when the cryptocurrency world experienced a major downturn, FTX helped some companies avoid bankruptcy. Now, FTX needed that help, but couldn't find it. On Thursday, it announced it could salvage the situation by exchanging some tokens with the blockchain platform Tron . However, FTX declared bankruptcy on Friday, effectively closing the matter. As you can see, quite a lot happened in just a few days; it was a long week for us.
The cryptocurrency world was already struggling to build trust. The decline experienced by FTX, which we considered to have a more stable trajectory compared to other companies, shook the confidence of many and affected the investments of some. The price of FTT, FTX 's main token, dropped by 80% . Since Tuesday, we have also seen significant turmoil, with major tokens like Bitcoin and Ethereum experiencing price drops of up to 20% .
Binance also removed FTT margin trading pairs and halted trading.
Japanese gaming company GREE is partnering with Ava Labs and plans to launch a Web3 platform on the Avalanche blockchain in 2023. The game will be released.
Dogecoin , which recently made headlines again due to developments regarding Twitter , announced that it may switch to Proof-of-Stake method with a major update . Now that the events of the past week have subsided, we can focus our attention again on the developments that may occur in Dogecoin.
The beloved Game of Thrones will be entering the NFT market with Warner Bros Discovery projects. If you recall , the first NFT collection released in this way was NBA Top Shot . Warner Bros Discovery has previously been associated with NFT collections based on titles such as Lord of the Rings , DC Comics , and Looney Tunes .
That was this week's news, and we hope to bring you more joyful news next Sunday. We hope you have a peaceful and wonderful day and that it inspires you on your other days.
If you'd like to connect us with people who might be interested and enjoy reading our content, you can use our link: bit.ly/merkezsizbulten
Additionally, you can stay updated on developments throughout the week by following our Twitter profile.
See you next week,
Decentralized Bulletin
Originally published on Medium on November 13, 2022. English translation of “Merkezsiz Bülten: FTX Skandalını Anlamak”.