The spectacular collapse of the crypto exchange FTX sent ripples throughout the world of finance in what appears to be a reckoning for the future of cryptocurrency.
FTX was one of the biggest cryptocurrency platforms in the world and had been vaunted at a massive scale by super-powered marketing campaigns featuring the likes of Tom Brady and Steph Curry. This month, that house of cards quickly collapsed, leaving many fearful that more blockchain companies, such as FTX rivals Binance and Coinbase, and digital currencies will face a loss of confidence and suffer failures.
The fallout has been enormous because of FTX's size and reach. FTX was valued at $32 billion in a financing round before the collapse this year. It was also the third-largest crypto exchange by volume, after Binance and Coinbase. Seeing a giant company and cryptocurrency platform that some staked their life savings on fall completely apart and file for Chapter 11 in just days inevitably undermines trust in other platforms and crypto companies. Especially given how much positive attention FTX and its founder, now disgraced Sam Bankman-Fried, received in the media.
Coinbase’s stock declined by nearly 9% on Monday alone — the lowest price since the company went public. In the past month, the company has lost about 38% of its entire value. That only adds to the downward pressure the company’s stock has faced, given that the price of bitcoin has been in retreat over the past year since peaking at $69,000 a year ago. In one year, Coinbase’s stock has fallen by 87%.
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