The aftermath of the FTX collapse continues to shake the cryptocurrency sector, as well as some companies that are not connected to digital assets. Regulators are pushing for stricter controls over the cryptocurrency market, and Sam Bankman-Fried continues to apologize and deny his responsibility for what happened.
Another firm facing the consequences of the FTX collapse has been revealed. Auros Global, an algorithmic trading firm focused on providing liquidity to exchanges and various token-based projects, missed a mandatory loan payment. According to the company’s underwriter, Auros is experiencing a “short-term liquidity issue as a result of the FTX insolvency.”
The firm’s total debt is 2,400 wETH (~$3 million). The lender is the institutional lending platform Maple Finance. Auros has until December 5 to pay the specified amount, otherwise, it will be forced to declare a default.
Solana’s blockchain network ecosystem was hit hardest by the FTX collapse. According to a Solana Foundation report, the firm lost more than $180 million in cryptocurrency that was locked up on FTX. For instance, company representatives claim that the exchange has about 3.5 million FTT tokens and 134.5 million SRM tokens owned by the foundation. Also, Solana Foundation owns 3.24 million FTX shares.
The exchange’s bankruptcy also affected firms that were unrelated to digital assets. In particular, FTX was a sponsor of the F1 Mercedes team, which abandoned all agreements on the eve of the Grand Prix in Brazil and removed the company logos from its cars.
According to Toto Wolff, CEO of the Mercedes-AMG Petronas F1 Team, the collapse of the crypto exchange has affected every F1 organization, as eight F1 teams have sponsorship agreements with various crypto exchanges. “The bankruptcy of FTX showed that the entire industry is out of control,” the CEO summarized.
His opinion echoed a statement by Christine Lagarde, President of the European Central Bank (ECB), who said that regulation of cryptocurrencies in the European Union is an “absolute necessity” after the collapse of the FTX exchange. At the same time, the official said that the developed MiCA legislation is not enough and it is necessary to create MiCA II, which will take into account decentralized finance (DeFi) and the risks associated with the interaction of the cryptocurrency market with traditional finance.
U.S. Treasury Deputy Secretary Wally Adeyemo also stated that regulatory regimes should be established to protect investors and consumers, as well as to achieve financial stability and block the illegal use of cryptocurrencies. Adeyemo said the U.S. is willing to work with international partners to “design a regulatory regime for cryptocurrencies to protect the global economy.”
Senator Tina Smith called the FTX collapse “shocking, not surprising,” pointing to gaps in regulators and calling on those responsible for explaining how they allowed it to happen.
Rostin Behnam, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), also pointed to the lack of a regulatory framework for regulating digital assets. He stressed the need to a develop “new authority for the CFTC” to help the Securities and Exchange Commission (SEC) regulate the crypto market. In doing so, Behnam argued that the CFTC should take on the role of primary regulator, as it “has many tools at its disposal” to protect crypto investors in the future.
At the same time, the U.S. House of Representatives has scheduled the first hearing on the FTX bankruptcy case for December 13. Sam Bankman-Fried is expected to give testimony. SBF has expressed a willingness to “appear before the committee and explain,” but he also stressed that he “may not be ready” for the scheduled date. SBF’s announcement came after a call from Maxine Waters, the House Committee on Financial Services chairwoman, to “talk to the public” and participate in the hearing.
SBF had a series of media appearances last week, during which he continued to vigorously deny any personal responsibility for what was happening. In an interview with the New York Times, for example, SBF said that he was unaware of any significant amounts of money transfers between FTX and Alameda Research. At the same time, he noted FTX and Alameda were tied “substantially more” than he had anticipated, and another of his omissions was Alameda’s “too big” margin position. SBF also said he “didn’t knowingly commingle funds” and “did not direct Alameda.”
In an interview for ABC News, SBF continued to claim that he “was not aware of any improper use of customer funds.” He also said he “should have been on top” and watching his employees, and regretted not doing so. As a reminder, earlier, the former executive publicly communicated his feelings about the FTX collapse to all its employees.
However, the cryptocurrency community perhaps does not believe in Bankman-Friede’s sincere repentance. For example, Jim Cramer, Co-founder of the financial literacy news site TheStreet and host of the show Mad Money, called SBF a “clueless idiot,” a pathological liar, and a scammer. Cramer also said SBF broke the law and should go to jail, whether he was aware of his crimes or not.
In the meantime, other cryptocurrency market participants, particularly CEX representatives, continue to try to win back users’ trust. Changpeng Zhao, the CEO of Binance, is doing his best to maintain his dominant position in the crypto market. Thus, on the official page of the crypto exchange, you can already find a report on the company’s reserves. And as part of the Proof-of-Reserves audit initiative, Binance has hired Mazars, an international accounting firm, to conduct an independent audit of CEX reserves.
The announcement of Binance’s willingness to be audited came shortly after Ron Wyden, Chairman of the U.S. Senate Finance Committee in Oregon, demanded that representatives from Binance.US, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin reveal “more asset information.” In addition to reserves, the official also insists on accounting information, compliance with anti-money laundering requirements, and controls over the manipulation of the digital asset market.
Recall that last week, Changpeng Zhao spoke to reporters in Tbilisi and talked a lot about the long-term impact of the FTX bankruptcy on the industry, as well as commented on rumors of his involvement in the collapse of the crypto exchange.
