After it became known a few days ago that Sam Bankman-Fried‘s crypto exchange FTX has massive liquidity problems, the crypto scene was shocked. This situation was completely unexpected. Binance canceled a briefly considered acquisition. Reportedly, up to $10 billion are missing. Now BlockFi, a crypto platform affiliated with the FTX group, has announced the suspension of withdrawals. BlockFi was impacted by the Terra-Luna collapse earlier this year and has been rescued by the FTX group.
The Fallen White Knight
In July 2022, BlockFi and FTX US agreed on a deal wherein FTX US would provide BlockFi a $400 million credit facility with the option to acquire BlockFi.
FTX US is not affected by the liquidity problems that are said to affect only international FTX, according to Sam Bankman-Fried. However, it is unlikely that FTX US will not also be caught up in the crisis as a result of the run by alarmed customers. On Twitter, customers are already reporting problems with withdrawals. Other Twitter users are fueling the panic by reporting rumors.
FTX US would not be affected by the liquidity problems that are said to affect only international FTX, according to Sam Bankman-Fried. But nobody believes him anymore, he is the fallen White Knight. It is highly unlikely that FTX US will not also be caught up in the crisis as a result of the run by alarmed customers. On Twitter, customers are already reporting problems with withdrawals. Other Twitter users are fueling the panic by reporting rumors.
The Second Bank Run 2022
We see here in the FTX collapse is a typical bank run fueled by customer panic, with the panic platform being Twitter. It won’t be long before the next crypto platforms announce difficulties.
It is already the second bank run this year after the collapse of Terra-Luna, which resulted in the bankruptcy of crypto hedge fund Three Arrows Capital (3AC) and crypto lenders Celsius Network and Voyager Digital. Many crypto platforms, such as Blockchain.com or BlockFi, were impacted and experienced liquidity problems. At that time, Sam Bankman-Fried presented himself as the white knight who saved the ailing crypto companies with his billions. Apparently, he also accessed money from FTX customers.
Criminalizing Crypto & Jail Time
The trust in crypto has been seriously damaged. Moreover, crypto will be criminalized in the wake of scandals and the wrongdoing of key crypto people. We can assume with high probability that the consequences of the 2022 crypto bank runs will be jail time for the key players. Let alone the regulatory scrutiny. Anything else would be a miracle, and they rarely happen.
