Last week the crypto market experienced its biggest shock since the death spiral of Terra’s UST stablecoin back in May, now there’s obviously a lot to unpack.
Here and I’ll start by advising you to avoid the FTX website and uninstall any FDX apps you have on your phone asap.
This is because the FTX exchange was hacked over the weekend, the administrator for the official FTX telegram group has warned that the FTX website and apps likely contain malware.
This means interacting with the website or mobile apps could result in you losing the crypto on your device.
So with that said let’s take it from the top.
You know that it seems to have begun with an article by coindesk published on the 2nd of November, this article contained information about Alameda’s balance sheet and led to questions about FTX.
Many of these questions related to whether funds on FTX were finding their way to Alameda, given that both companies were founded and operated by the same people Sam Bankman-Freed or SPF and his friend Gary Wang.
We now know that FTX used upwards of 10 billion dollars to prop up Alameda.
Now for those unfamiliar Alameda research is a crypto trading firm which rose to prominence in 2018 for making massive profits buying cheap BTC in the USA and selling it in Japan where BTC prices were much higher.
As a not so fun fact Alameda actively traded almost every crypto on every exchange and subsequently became a market maker.
Meaning that it provided cryptocurrency to exchanges for their users to trade with Alameda quickly became one of the largest market makers in crypto and is also the largest recipient of all the USDT ever printed by Tether and this is basically why USDT has been wobbly.
As most of you will know the catalyst that led to FTX’s collapse was Binance CEO Changpeng Zhao’s tweet that his exchange would be dumping its FTT stake following all the revelations about the relationship between FTX and Alameda.
This crashed FTT’s price and led to a bank run at FTX.
Given that FTX had given most of its user assets to Alameda to plug a multi-billion dollar hole in its balance sheet, a hole caused by Terra’s collapse.
FTX didn’t have the crypto on hand to honor user withdrawals, finance subsequently offered to buy FTX but bailed on the deal because of balance sheet concerns FTX Alameda research and even FTX US which Sam said would be unaffected.
All filed for bankruptcy late last week along with the 100 plus subsidiaries of these entities.
SBF and some of his inner circle are now reportedly quote under supervision in the Bahamas where FTX is based.
Meanwhile up to a billion dollars of user funds from FTX seem to be on the move because of the aforementioned hack.
The identity of the hacker was apparently discovered by the Kraken cryptocurrency exchange.
Now how a hacker experienced enough to do next level malware managed to get caught by Kraken is beyond me, the only thing that makes less sense than that is why SBF and Alameda CEO Caroline Ellison haven’t been arrested yet.
Apparently SBF is playing video games while under supervision, something tells me this amnesty has to do with all the political connections the pair have in the United States.
But let’s not go there, now besides when the billions of dollars of customer crypto will be recovered what everyone is wondering is just how much damage the FTX Alameda situation will do to the crypto market.
If the charts didn’t make it clear enough the effects of this fallout are still being felt logically.
The cryptocurrencies that have been hit hardest are those with direct exposure to FTX and Alameda, both entities are estimated to have invested in over 250 crypto projects.
For now I’ll just focus on the ones that have been hardest hit and the ones that are likely to be hardest hit.
Going forward an easy way to check this is to go on coin market cap and sort the top 100 cryptos by those which have suffered the largest losses over the last seven days.
At the time of shooting Solana is at the top of this list followed by Aptos, our weave eight coin, near protocol and algorand.
You may know that it was FTX’s de facto exchange chain as such both FTX and Alameda leverage.
Solana for just about everything you could imagine including defy, nfts and even the issuance of wrapped cryptocurrencies all of which are now basically worthless.
There’s no denying that the future of Solana is in question because of the FTX Alameda situation.
Which is it’s worth Solana Labs the company behind Solana has confirmed that it has enough funds to continue building for 30 to 40 months.
As for Aptos, as you possibly know, FTX was one of its biggest investors and was also actively advising the project.
The same goes for Near Protocol and for Apecoin.
FTX and Alameda were two of the biggest investors in the board Abe Yacht Club.
Our Weave and Algorand are where things get interesting because FTX and Alameda didn’t seem to have direct exposure to AR or Algo, however crypto VC multi-coin Capital did and it confirmed that 10 of its assets are stuck on FTX.
I suspect that multi-coin may be selling AR Algo and other alts to plug this hole.
If you’re wondering which other alts, multi-coin might be dumping check the weave or algorand prices on coin market cap and click on the multi-coin capital portfolio tab under the name.
Note that you might have to click “view all” to see the other VCS.
Also note that multi-coin isn’t the only one in this position as an aside I also did find it quite weird that multi-coin deleted all of their tweets yesterday.
Now when it comes to which cryptos are going to be hit the hardest, going forward almost all of them are a part of Solana’s ecosystem.
If my calculations are correct, FTX and Alameda collectively hold over 2 billion dollars of soul.
This is roughly the same as their collective holdings of Serum’s SRM token.
Next up appears to be maps.
Me with at least 600 million dollars of exposure.
Aptos with at least 300 million dollars of exposure and Oxygen with at least 50 million dollars of exposure.
FTX and Alameda will likely liquidate all of these cryptos in the coming months to compensate FTX investors and we hope users.