Sat, March 02, 2024

The FTX Hack Leads to Crypto Collapse

Bitcoin price decrease

During the weekend, crypto industry got “dirty” when FTX and its US subsidiary FTX US were hacked. Hundreds of millions of dollars were stolen from the exchange’s wallets. After sending $405 million to the wrong recipient, crypto exchange Crypto.com has come under fire. This alarmed crypto enthusiasts as the whirlwind of this week’s collapse of rival exchange FTX filed for bankruptcy on Friday. Following the abrupt release of FTT, FTX’s native tokens, without official explanation, the cryptocurrency exchanges Binance and Huobi rushed to block deposits.

The FTX exchange collapse caused crypto markets to fall for the worst seven-day stretch since the Terra blockchain’s meltdown in June. The event is processed by relevant analysts. Some cryptocurrency analysts saw it as a fluffing of trading volumes, which is why they are worried. A further complication of the matter is that the initial analyst who noticed the collapse was a Coinbase employee.

It’s evident that the collapse of the FTX exchange last week was one of the crypto industry’s worst incidents. The price of bitcoin (BTC) dropped 22% in seven days, its worst weekly performance since June.

 

What comes after the hack?

 

The future of struggling digital-asset markets, as well as the reputational implications for the blockchain business, are being studied by crypto analysts. Centralized crypto exchanges are being pushed to provide proof of reserves. This helps gain convincing momentum in the industry. It could take a long time, even months, for the sector to regain the trust of the public.

“Proof of reserves is great so long as you have proof of assets and liabilities,” a co-founder with crypto venture capital firm Framework, Michael Anderson told Yahoo Finance. “It gives you a portion of the story. It helps people know if a company is using its customer assets as collateral to borrow money.”

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