Last week, FTX continued to dominate headlines in the crypto sector and beyond. And that’s not likely to stop next week.
We’ll probably see consequences from the collapse of the exchange continue to materialize as a contagion within an already troubled industry. Pressured by declining crypto prices and macroeconomic conditions, crypto companies now facing FTX fallout may begin making cuts. And amid Elon Musk’s radical restructuring of Twitter, there are also questions about the future of crypto’s favorite town hall.
Spreading contagion?
Last week, some of the knock-on effects of what was once considered one of crypto’s premier exchanges became clear. For example, Genesis Global Capital, the lending business of Genesis Trading, suspended redemptions and new loans in the wake of the collapse. Later that day, crypto exchange Gemini announced that its Earn program wouldn’t be able to meet customer redemptions for the next five days following its lending partner pausing withdrawals.
Now, JPMorgan analysts are seeing accelerated outflows from the exchange and from rivals such as OKX and Crypto.com, along with stablecoin market shrinkage. Companies including crypto bank Silvergate, which has disclosed exposure to FTX, have also encountered difficulties, with prime broker FalconX announcing that it will no longer use the company’s Silvergate Exchange Network. FalconX said its decision was based on publicly available market information, raising questions about whether others may follow suit.
Notably, all eyes will be on a court hearing on Tuesday after FTX announced on Saturday that as part of its Chapter 11 bankruptcy protection process, it will conduct a review of its assets, which may lead to the sale of business interests held by the embattled exchange.
Layoffs continue
The demise of FTX may accelerate the process of layoffs in crypto companies as the collapse continues to take effect.
In the weeks since the market turmoil spurred by FTX’s liquidity crunch, Valkyrie Investments, Coinbase and Solana-based Metaplex have made employee culls. Amid a wider, bleak economic outlook, tech giants such as Amazon and Meta have cut jobs as well. Next week, as the dust continues to settle, will we see further cuts in the crypto industry?
Twitter takedown
Last week, Twitter was awash with users saying goodbye to the platform, as much of its workforce left.
Since billionaire Musk bought the company, internal strife and staff reduction have been rampant. Along with sizable layoffs, Musk told employees to quit if they couldn’t commit to a strenuous work schedule.
It seems that some of them took the message to heart — crypto boss Tess Rinearson left the platform, Bloomberg reported on Friday. And while a funeral for crypto’s town hall might be premature, questions abound as to whether it can withstand traffic surges from events such as the World Cup. Musk also decided on Sunday to lift former President Donald Trump’s Twitter ban, after taking a public poll.
© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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