Crypto Three Things (11/14)

Monday, Nov 14th 2022


“I always take bold moves. So it can have great return but with great risk.” - Masayoshi Son

1) FTX's Dire State: The now-defunct digital asset exchange, touted as one of the most stable players in the crypto space, held only about $900M of sellable assets against $9B of liabilities when it was met with a torrent of customer withdrawals in a single day. Adding to the woes, an unauthorized transaction led to $600M missing – an attack FTX labeled as a "potential hack."

Titan's Takeaway: The spectacular failure and aftershocks are grand, even by crypto standards. Being among the largest blowups in the industry's young history, it will likely require months, if not years, to unravel, leaving the space forever changed.

2) Jitters: Digital asset trading venue is under pressure after a suspicious transaction didn't go unnoticed by the community. As much as $400M worth of Ether was supposed to be moved to a cold wallet but ended up on rival exchange While the funds were swiftly returned, the accidental deposit fueled a wave of withdrawals and prompted a response from Binance chief Changpeng Zhao, who described the demonstration as a "clear sign of problems."

Titan's Takeaway: As crypto exchanges race to ease user concerns, it takes little to spook cryptocurrency traders now as FTX's bankruptcy ricochets through the industry.

3) SoftBank's $100M Loss: Japanese conglomerate SoftBank is set to write down its $100M stake in FTX to zero following the crypto exchange's fallout. The news arrived during SoftBank's earnings call, with the company saying the markdown wouldn't have a significant material effect as its Vision Fund posted a $7B loss in the third quarter.

Titan's Takeaway: SoftBank's dismal yearly performance worsened after this not-so-long-ago wildly successful crypto bet soured in days. The Masayoshi Son-led fund is joined by Sequoia Capital – another high-profile VC firm that backed FTX and had to mark its $210M investment down to $0.

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