This Week in Crypto

November 11, 2022

It has been another tumultuous week in the cryptosphere. The overall market cap has significantly decreased, while volatility has spiked in both directions in short time frames. In this week’s episode of “This Week in Crypto”, we take a deep dive into what has happened, and how to make sense of it all.

FTX, Alameda Research, and Binance

FTX, one of the largest exchanges in the industry, has been failing to meet the withdrawal requests from its users in a timely manner. As complaints grew larger, FTX’s CEO, Sam Bankman-Fried (commonly known as SBF) reassured the users that the exchange has enough liquidity to meet all withdrawal requests. However, the troubles began as even more concerned users began to request for withdrawal. Moreover, Binance has openly stated that it will begin exiting its position in FTX’s native token, FTT. Within a few days, FTX has officially admitted that it is facing a liquidity crisis. The price of FTT began to drop significantly.

On the same day, Binance’s CEO, Chengpeng Zhao (commonly known as CZ) announced that FTX and Binance have entered a non-binding agreement for Binance to acquire FTX and to aid the liquidity crisis. Historically, companies that Binance acquires have seen a sudden spike in price. Traders flocked to acquire FTT, seemingly at a discount, and FTT enjoyed a sudden surge in price.

In less than 24 hours, Binance announced that it is pulling out of the deal, stating that the situation looks worse than previously communicated. The price of FTT began dropping again, with no end in sight.

Further research has revealed that Alameda Research, the sister company and VC of FTX, has been receiving a significant portion of deposited user funds in FTX as a loan to make risky investments. The hedge was so unstable that the assets could not cover even one peak day of withdrawals from FTX.

In turn, it indicated that Alameda Research is now facing a sudden need to repay its loan from FTX. Users turned to the most likely scenario of Alameda Research liquidating its assets to pay back the loan. As Alameda Research is a headliner of the Solana ecosystem, the confidence in Solana and its ecosystem dropped, resulting in a dramatic decrease of price in SOL tokens and other altcoins such as Serum (SRM).

The downfall of one of the largest exchanges, along with the contagion it brought on other assets, have lowered confidence in the overall cryptocurrency market. This resulted in the drop of prices across the entire industry.

Key Takeaways

The unfortunate scenario caused by FTX and Alameda Research has been a perfect example of how unchecked greed can result in high-risk moves that can bring a quick downfall. In response, MXC’s CEO Xin Hu has made a statement to clarify that MXC is unaffected by the event. Not only are user’s deposited MXC stored safely in DataDash, MXC does not put the users’ deposited funds at risk. MXC stores the deposited tokens safely, and even pays out lucrative yield on the deposits. Download the DataDash mobile app to start enjoying security and convenience.

Is USDT Going Down?

The FTX and Alameda Research contagion has continued to affect USDT (Tether). As sceptical researchers began looking deeper into FTX and Alameda Research, an old statement from Tether appeared where it stated that Alameda Research is one of the top minters of USDT. The news quickly spread, creating a rumour that Alameda Research has a significant portion of USDT that they are looking to sell. Coincidentally, a transaction was recorded on the blockchain where Alameda Research swapped around a quarter of a million dollars from USDT to USDC. Many began to exit USDT, and swap to USDC and BUSD. USDT has depegged slightly, yet has recovered since.

Key Takeaways

The chances of USDT depegging to a larger degree is extremely small. While USDT did experience serious depegging a few years ago, it has quickly recovered its peg. Since then, Tether has also been conducting a series of internal audits to ensure that they have enough reserve in cash to back up the issuance of USDT. For now, it appears that the fear of USDT depegging is spread by rumours and fear.

MXC on World Tour

CEO Xin Hu is currently on a world tour, representing MXC! Starting from the first stop, Istanbul, Xin will go around the globe during the next few weeks to meet with current and future partners and community members to solidify MXC’s network and vision. Exciting partnerships are already underway, as MXC looks forward to expanding its value offerings to the community as a result.

If you wish to meet with Xin in your city, make sure to follow MXC on Twitter and send us a DM to set up a meeting!