Recent Crashes In Crypto Space- Celcius, Luna, FTX – Richard Heart
The cryptocurrency revolution has fallen victim to its hype. The first factor behind this chill is the proliferation:
Last year, of the 68 crypto coins declared dead, 35 were “joke” coins. This year, three major crypto-currency projects have entirely crashed. These are Celcius, Luna and FTX. And apparently, the founder of FTX was also involved in the collapse of Luna. Of course, we’ll also tell you what role FTX’s founder played in destroying Luna and FTX.
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We publish a new blog daily. Let’s get started. The euphoria of the great days has turned short in the crypto world. After a stellar 2021, the crypto-currency market collapsed 2022, losing two-thirds of its value. Already facing a significant crisis of confidence.
This exchange platform, a significant player in the sector, was forced to file for bankruptcy on November 11 following revelations of fraudulent transactions affecting several hundred thousand creditors worldwide. As a reminder, FTX was the 2nd largest cryptocurrency exchange in the world. Its collapse caused 1 million victims in the crypto sector.
A drama that contrasts with the extraordinary daily life of its employees, and even more of its founder, totally disconnected from reality and decency. Many users still have their funds blocked, up to several billion dollars. On November 13, the authorities in the Bahamas and worldwide launched investigations. Sam Bankman-Fried, the founder of FTX, remains unaccounted for and says he is in hiding for his safety.
Many companies have already ended their partnerships with the platform, and many assets related to FTX have been frozen. The number of people affected by the bankruptcy exceeds one million, and the money lost is between $10 to $50 billion. The new CEO of FTX sent to the American justice numerous documents showing the disastrous management of the company and the funds used by certain employees.
However, Sam Bankman-Fried spoke publicly for the first time since the collapse of FTX at the New York Times Dealbook Summit in an interview with Andrew Ross Sorkin. He took the opportunity to say that contrary to the advice of his lawyers, he preferred to speak publicly to set the record straight.
He also said that it was still possible to repay the creditors of the platform entirely. Regarding him, he revealed that he now only has a bank account with a balance of 100,000 dollars and that only one of his bank cards remains functional.
Overall, the ex-CEO of FTX has mostly repeated that the various elements that have emerged since the fall of his empire are primarily ” management errors” and “unintentional mistakes.” However, he did acknowledge that the platform did not insure its clients’ deposited funds at a 1:1 ratio. Regardless, FTX is effectively dead, and we hope that Sam Bankman will find a way to refund all victims of this crash. However, the FTX crash is not the only scandal Sam Bankman-Fried is accused of.
Indeed, he is being reinvestigated for the role FTX and Alameda may have played in the collapse of the Terra ecosystem last May. The New York Times reported the news, which cites anonymous sources close to the case. Federal prosecutors in the United States are reportedly looking into possible market manipulation by Sam Bankman-Fried, shortly before the collapse of the Terra ecosystem.
Luna’s algorithmic TerraUSD (UST) stablecoin had the flaw of being well under-collateralized and investing most of its bitcoin reserves, making it vulnerable to a rapid drop in cryptocurrency prices. Rumour has it that some “whale” placed large bets against Luna, TerraUSD, and Bitcoin, which accelerated the fall of Luna/TerraUSD, with investors leaving UST at lightning speed when it became clear that the under-collateralized reserves would be quickly exhausted.
The process that saw depositors exit quickly, cryptocurrency prices plummet, attackers bet against Luna, and UST is believed to have accelerated Luna’s fall. Investors should remember, however, that the attack was made possible because of vulnerabilities in the Terra experiment, which was not built to withstand large redemptions and a crypto asset collapse.
Luna’s price
Investors lost about $40 billion as Luna’s price of $116 fell to $0.1. TerraUSD, its stablecoin, fell to less than $0.1. Now, investigators are looking into whether “SBF’s” actions participated in the collapse of both LUNA and UST cryptocurrencies. Manhattan prosecutors are looking into possible price manipulation that benefited the two companies founded by Sam Bankman-Fried: FTX and Alameda Research.
As a reminder, the UST stablecoin could not maintain parity with the dollar during the Terra collapse because of too many sell orders. It is now known that UST sales came mainly from Alameda Research, according to the New York Times. As a reminder, Sam Bankman-Fried has confirmed that FTX diverted client funds to bail out Alameda. If this were related to the Terra case, the two biggest crypto scandals of the last few years would be linked.
However, the revelations for Sam Bankman-Fried, FTX, and Alameda Research follow one another. The transgression of the “golden boy” of cryptos seems to affect a wider field than initially imagined. Where will the investigation end? Nobody knows.
Luna and FTX
Luna and FTX aren’t the only big crypto crash this year. Crypto asset lending specialist Celsius Network also announced in July that it had filed for bankruptcy, adding its name to the list of victims of the price collapse in this market.
It’s been several months since Celsius, one of the largest cryptocurrency lending platforms was in crisis. The platform promised savers higher returns and cheaper credit access than traditional banking institutions offered. It declared bankruptcy amidst a decline in cryptocurrency prices. As mentioned earlier, the crypto-currency market in 2022 was volatile due to significant financial issues such as inflation, a weak stock market, and the Federal Reserve System’s interest rate increase in the United States.
As a result, people began to withdraw their crypto investments from the Celsius network for fear that the value of their crypto-currency would collapse. They began to convert them into cash and other more stable assets. As more and more people began to withdraw their investments from the Celsius network, other investors became concerned about Celsius’ ability to pay back all the crypto funds deposited.
This created a panic, where more and more people started withdrawing their deposited crypto funds from Celsius. Just hours after Celsius announced that it was freezing all withdrawals, the value of the Celsius crypto-currency dropped by 70%. The price of the Celsius token continued to fall over the next few days. Along with the drop in the Celsius price, the crypto market has seen a massive sell-off due to the volatility and falling prices of various significant crypto-currencies.
On July 3, 2022, Celsius announced it would lay off 23% of its staff due to growing liquidity issues. On July 13, 2022, the company finally filed for bankruptcy. So, overall, this year could have been better for crypto. And Richard Heart predicted that. As a reminder, in 2017, Richard predicted that Bitcoin would reach $20,000 when it was only $5,000, and he called the Bitcoin top at $20,000. In 2019 he also indicated that Bitcoin would get $60,000.
Richard called the top on Bitcoin at $65,000 on the day, warned everyone about the Ethereum top, and reminded everyone that the ETH top came 27 days after the last time. And indeed, it happened again. This year, he also stated that bitcoin would fall to $10,000. Currently, bitcoin is sitting at $17,000, so if things go as he predicted, we are far from the end of the bear market.
To prevent you from getting caught up in situations like this and losing all your money, we’ve recorded a video explaining step-by-step what you need to do to protect yourself from the bear market and keep making money in crypto. So if you’re interested, watch the next blog on the end screen.
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