FTX's collapse is shaking crypto to its core. The pain may not be over
The crypto industry has been rocked by the collapse of FTX. Big-name investors from Sequoia Capital to SoftBank dumped hundreds of millions of dollars into the company, making bets that are now worthless.
Countless individual traders were hit by huge losses, too. Regulators are investigating claims that customer funds were misappropriated by FTX and its trading affiliate Alameda Research.
It marks one of the most serious problems for crypto to date, with questions rising about the health of other industry giants such as Binance and Crypto.com.
Contagion from the debacle is already playing out, with crypto lender BlockFi now seeking bankruptcy protection after revealing lending exposure to FTX and Alameda.
"I don't think all the dominoes have fallen out from the contagion," says Marieke Flament, CEO of the Near Foundation, which took investment from FTX. "The impact that this will have is that a lot of projects actually are not going to have the funds, and therefore the resources, for them to continue and develop."
Investors are yanking their coins from exchanges to avoid getting caught in the fallout. Total bitcoin balances on exchanges fell from a peak of 3.1 million in 2020 to around 2.2 million at the end of 2022.
"Nothing's too big to fail," says Ian Rogers, chief experience officer of crypto security firm Ledger.
Is it time to abandon crypto exchanges, or is there still a place for centralized firms in an industry that prides itself on decentralization? Watch the video to find out.