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Crypto Twitter distraught over FTX collapse

10 Nov, 20224 min readOther
Crypto Twitter distraught over FTX collapse

The world’s third largest exchange FTX collapsed within a matter of days and the community’s pain is visible to all on Crypto Twitter.

The severity of losses

Crypto Twitter has been plainly demonstrating the severe results of the FTX collapse.

There are countless investors who had more than half of their funds on FTX and are concerned if they can ever get them back.

95% funds on ftx. The pain is fucking real.— Mohit Sorout 📈 (@singhsoro) November 9, 2022

Amongst them, some nervously hope they can retrieve their investments, while others have already given up. An investor replied to the Tweet above to say:

“Your funds aren’t on FTX. Your funds are gone.”

There are also investors who lost their savings due to the plummeting FTT. Since FTT is FTX’s native token, it is not surprising for investors to hold substantial amounts of FTT for trading purposes. Even if FTX somehow manages to enable its users to withdraw their funds, the ones who invested in FTT will still be at a loss.

FTT’s collapse also reminded the community of the Terra-Luna collapse, which only happened six months ago. Some members of Crypto Twitter drew attention to the damages these collapses caused to crypto’s reputation and called for crypto regulations to prevent similar catastrophes to occur in the future.

#Crypto need to be regulated…#FTX collapse is destroying crypto in the past few days.. — Pierre_Trading News (@Pierre_StockUP) November 9, 2022

On the other hand, Science.io’s CEO Will Manidis is insinuating that FTX’ CEO Sam Bankman-Fried was created by an intelligence agency that wanted to prevent its adversaries from laundering money through crypto.

if i were an intelligence agency, and i was concerned my adversaries were using crypto to launder funds– how would i stop that?first i'd find the central casting idea of a tech founder– mit dropout, finance, cargo shorts, long hair, sleeps on a beanbag kind of guy— Will Manidis (@WillManidis) September 21, 2022

According to Manidis, FTX’s off-shore placement and its unauditable transactions were arranged that way on purpose.

Background

FTX first drew attention when Binance’s CEO Changpeng (CZ) Zhao‘s Tweet on Nov. 6, which revealed Binance’s decision to liquidate all its FTT holdings due to “recent revelations that have come to light.” Since FTT is FTX’s native token, the community was quick to jump to conclusions and assumed a Terra-Luna-style collapse was on its course.

SBF was quick to respond to CZ. Even though he deleted those Tweets now, SBF assured the community that FTX and its assets were fine on Nov. 7. Despite his efforts, FTX reserves started to plunge and the community started to lose its trust in SBF and FTX.

On Nov. 8, CZ Tweeted to inform the community of Binance’s intention to fully acquire FTX and help cover the liquidity crunch it has been facing. Within 24 hours, a U.S. agency opened an investigation into FTX, which caused Binance to back out on its acquisition offer.

According to CryptoSlate data, the FTT token lost almost 90% of its value since the beginning of the week, falling from around $24 to $2.8 Solana (SOL) also took its fair share of the tremble and recorded around 50% loss, retreating from $32.7 to $16.98. In addition, SBF’s Alameda Research website also went private.

Reaction towards CZ

Another popular hashtag on Crypto Twitter is #CzBinance, at the time of writing. Given that everything started to unravel following CZ’s Tweet on Nov. 6, some members of the community are accusing CZ of bringing FTX down intentionally.

All hail The Lord of Crypto – Cz Binance!What a fucking moveThis will go down as one of the greatest events in the Crypto history books #CzBinance #FTX #BinanceSmartChain— Ken Llamas (@KenTheCrypto) November 8, 2022

Zeynep is an academic who turned to crypto in 2018. Originating in social sciences, she is especially interested in the social impact of blockchain and cryptocurrencies and strongly believes in their transmuting power.

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