Fall of the Crypto-Empire FTX – Cryptocurrency Market Overview

During the past two weeks, the total market capitalisation exceeded EUR 804 billion. The decrease in market capitalisation in the 14-day horizon is 21%. Over the past 14 days, the price of Bitcoin has fallen by 22% to around €16,100. Bitcoin dominance is currently around 38.5%.

Fall of the Crypto-Empire FTX

The fall of one of the most popular crypto exchanges, FTX, and its related company Alameda Research, shook the entire crypto community. What happened, and what consequences will it have for cryptocurrencies?

The whole saga surrounding FTX and the company Alameda Research began at the beginning of November. News portal CoinDesk published a shocking document on its website regarding the balance sheet of Alameda Research, which caused a massive response among the community.

According to leaked information, Alameda Research was supposed to hold a huge amount of illiquid FTT tokens on its balance sheet. Illiquid since they were “artificially printed tokens” that were never publicly traded and were not part of FTT’s circulating supply. This immediately raised questions about FTX’s liquidity.

Binance founder Changpeng Zhao (CZ) immediately responded to the alarming news, sharing a post on Twitter that his company will sell all FTT tokens it received in July 2021 for selling its stake in FTX due to uncertainty. This tweet triggered a mass sell-off of the FTT token, with its price plunging by as much as 30% in one day. Further response to this post was also huge asset withdrawals from FTX, with $6 billion worth of withdrawals recorded in 72 hours.

A bit of positive news hit the market last Tuesday when both CZ and Sam Bankman-Fried shared posts on social media regarding Binance’s acquisition of FTX. Binance crypto exchange was ready to buy FTX and thus save it from the worst possible scenario – bankruptcy.

However, the very next day, Binance withdrew from the acquisition. In its statement, Binance cites serious findings regarding FTX’s handling of client funds and a possible investigation by federal authorities.

This announcement was the final nail in the FTX coffin. The crypto exchange was forced to suspend withdrawals because it was unable to process them. The FTT token plunged as much as 95%, as did the fortune of FTX founder Sam Bankman-Fried.

Bankman-Fried was still trying to reach out to other industry rivals, including Coinbase, to help solve FTX’s liquidity problems and get the company back on its feet. Unfortunately, unsuccessfully. FTX was thus forced to declare bankruptcy on Friday, with Sam Bankman-Fried stepping down as CEO of the company.

The FTX crypto exchange has been backed by several major players in the cryptocurrency world, including SoftBank Vision Fund, Tiger Global, Sequoia Capital and BlackRock. A few months ago, FTX also saved the Voyager Digital and BlockFi platforms, which were threatened with bankruptcy. Therefore, it is possible to expect a chain reaction and prepare for the fact that FTX may not be the last platform to run into huge financial problems. Source

The Law on Taxation of Cryptocurrencies Did Not Pass

According to information from the website of the National Council, the change in the law regarding the tax burden of cryptocurrencies did not pass.

Proposal by members of the National Council of the Slovak Republic, Petr Cmorej and Marián Viskupič, to issue a law amending and supplementing Act no. 595/2003 Coll. on the income tax, which was supposed to bring about the taxation of cryptocurrencies at the rate of 7% after one year and also the abolition of the health levy, did not receive sufficient support in the parliament. A total of 136 MPs voted out of 139 present at Tuesday’s meeting, while only 45 were in favour. Another 47 MPs voted against the bill, while 44 MPs abstained from voting.

It seems that Slovakia will continue to be at the tail end of innovations in the form of cryptocurrencies and blockchain technology. The disproportionate tax burden will certainly not attract any crypto companies here. On the contrary, it will rather cause an outflow of human and financial capital to countries with more advanced and open legislation. Source

Circle Adds Support for Apple Pay

Circle, the issuer of the second largest USDC stablecoin, has announced support for the Apple Pay payment system to further connect crypto and traditional payment systems.

Circle announced this in a blog post on 15 November, suggesting it could boost sales for crypto-native businesses as it can facilitate traditional payments from non-crypto customers while allowing customers to purchase cryptocurrencies via Apple Pay on their preferred exchange.

According to Circle, the addition of Apple Pay support will benefit brick-and-mortar businesses as it allows them to shift more retail payments to digital currencies.

Apple has more than 1.8 billion active devices worldwide, with Apple Pay reported to be one of the most used digital wallets in the United States after PayPal. Source

Can Proof-Of-Reserves Increase Transparency?

After the fall of FTX, several crypto exchanges began to push for increased transparency and openness towards their clients. They want to achieve this through so-called Proof-of-Reserves, or through evidence that will demonstrate the amount of reserves on exchange crypto-wallets in real-time.

Proof-of-Reserves should take the form of cryptographic proof that the exchange is liquid enough to process all customer withdrawals while also allowing the exchange’s clients to keep track of where their money actually is.

One way to achieve this is by using so-called Merkle trees. These trees create efficient data structures called “hash trees” that can be securely verified – and thus, these structures would create something like an overview map of customer funds held in exchange wallets.

After Binance announced its plans to introduce proof of reserves, other exchanges, including KuCoin, OKX and Gate.io, announced similar plans. Crypto exchange Kraken is ahead in this as it has been implementing Proof-of-Reserves for more than a year. Source

Cristiano Ronaldo Presented an NFT Collection

Football icon Cristiano Ronaldo will soon not only be making an appearance at the World Cup in Qatar, Asia, but also will be introducing his own NFT collection called CR7 NFT.

Back in June, the soccer megastar partnered with crypto exchange Binance to create his own NFTs for his multi-million fan base. According to available information, Ronaldo will release the first NFT collection at the end of this week.

Ronaldo won five Golden Balls during his rich career and has played for European giants such as Manchester United, Real Madrid and Juventus and is currently the most followed footballer on Instagram. Source

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