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14 Nov, 2022 14:53

FTX implosion takes its first crypto victim

The Solana token is leading the industry’s market meltdown
FTX implosion takes its first crypto victim

The cryptocurrency Solana, associated with the bankrupt FTX exchange, continued its three-day retreat on Monday to trade at around $14 a token. The price is now down 95% from its all-time high of $259.96 last November.

The token has lost 61.6% of its value in the last seven days, according to data firm CoinGecko.

The drop is a result of the November 8 collapse of the FTX crypto exchange, which filed for Chapter 11 bankruptcy on Friday. Since then, the price of Solana has declined by 51.5%, which translates into a $5.5 billion loss in market value.

The launch of bankruptcy proceedings by FTX came days after larger rival Binance abandoned plans to acquire the company and left it with the task of raising roughly $9 billion from investors and rivals to stay afloat.

Binance backed out of the deal after a due diligence examination and recent reports of mishandled customer funds, as well as alleged investigations by the US authorities into the company.

Meanwhile, blockchain research firm Nansen revealed over the weekend that $662 million flowed out of FTX’s US and international exchanges. The firm’s main wallet, which was used to process withdrawals, was drained of its entire balance of 45.8 million FTT tokens, worth an estimated $97.2 million, Nansen said.

On Monday, Binance CEO Changpeng Zhao announced plans to set up an industry recovery fund in an effort to “reduce further cascading negative effects” of the FTX bankruptcy. Zhao added the fund will assist otherwise strong projects that are facing a liquidity squeeze.

The crypto market has lost 17.6%, or $188.4 billion, since November 7, with major crypto Bitcoin sliding down 22.4% in one week. Ether, the second cryptocurrency by market value, has fallen 24.4% over the past seven days.

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