After FTX, the state of another crypto-juggernaut worries…

JVTech News After FTX, the state of another crypto-juggernaut worries…

While the second largest crypto platform (FTX) officially declared bankruptcy on November 11, the fallout already seems to be felt in the sector. Indeed, a cryptocurrency colossus already seems to be suffering from the provocative situation of anxiety reigning in the virtual currency market.

The critical situation of FTX puts the entire crypto market in trouble

Considered the second largest platform for buying and reselling cryptos, FTX has recently experienced a spectacular collapse in recent days. It all started last November 8, when the price of the platform’s crypto token (FTT) plummeted.

This critical situation is the result of a more than fragile state of the treasury of Alameda Research, the trading company of the CEO of FTX. In concrete terms, all of the company’s share capital was held in FTT, the ticker symbol of the FTX platform.

A news that scared the whole cryptocurrency investor, as in case of FTT’s price drop, the company exposed FTX very widely until it became potentially bankrupt – and it didn’t take long to become a reality…

Despite the efforts of Sam Bankman-Fried (CEO of FTX and Alameda research) to calm down users, nothing could stop the tornado that hit the FTX platform.

Thus, the company officially declared bankruptcy in accordance with US law on November 11. Since then, many expect multiple companies to join FTX in the fall…

FTX: crypto platform makes a collateral casualty

As with the Terra Luna crash, it’s a safe bet that many companies connected (closely or indirectly) to FTX will experience the same fate in the coming weeks.

The first victim of this unfortunate event is the Crypto.com platform.

The cryptocurrency exchange platform, which you’ve probably seen on the jerseys of the UFC fighting organization or even the Lakers in the NBA, is in the sights of some new investigators.

During a recent audit, data collected revealed that Crypto.com’s funds were based on a very fragile foundation – a scenario reminiscent of FTX. Indeed, out of 2.88 billion euros of equity, the company would hold $558 million in Shiba, or about 20% of the funds.

This news is not reassuring to users as Shiba is what is called a “shitcoin” in the crypto community: a highly speculative currency not based on any fundamental utility. So if Shiba’s value splits soon (which is not impossible given the current environment), then Crypto.com’s cash flow would take a serious hit.

To reassure most users, the platform’s spokesperson was quick to address the situation to CoinDesk:

“The reason our proof of reserves includes Shiba is that we hold our users’ balances at a 1-to-1 ratio. So our proof of reserves is driven by our customers’ holdings.”

Despite efforts to reassure investors, the company continues to cultivate suspicion among users. The financial media CNBC particularly revealed that the last company of the CEO of crypto.com had declared bankruptcy in 2016. All this inevitably created a climate of general mistrust.

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