Over the past 2-3 weeks the market has been slowly stabilizing after the FTX crash. Prices survived one of the market’s biggest crises relatively unscathed. But the uncertainty in the market is still great. In the aftermath of the FTX crash, rumors continued to swirl that other crypto projects may also be insolvent. Which project presents the greatest risk of insolvency?
In this article, we take a look at various crypto companies and analyze the likelihood of these projects going bankrupt.
What caused FTX to go bankrupt?
Sam Bankmann-Fried was considered one of the biggest stars in the crypto world. With his companies FTX and Alameda Research, the billionaire has enjoyed massive success in recent years. However, in recent weeks it has become known that there are significant shortcomings in the balance sheets of the companies mentioned. In addition, FTX also held significant amounts of its reserves in the form of the FTX token, the value of which is volatile.
Following an announcement by Binance to liquidate all of its FTX tokens, the price of the FTX token plunged, losing over 90%. As a result, FTX had to go bankrupt. Moreover, there was probably a massive hack on the platform, during which tokens worth US$400 million were stolen.
Could the FTX crash trigger a chain reaction?
The FTX crash caused massive losses in cryptocurrencies. Bitcoin is down 25% and altcoins are mostly over 30% in value. But above all, the uncertainty in the crypto market has increased significantly. How many other companies also have hidden holes in their balance sheets and are standing on feet of clay?
Some observers have suggested that the FTX implosion could set off a chain reaction. In this way, financial difficulties could be discovered by other companies and this could lead to problems for these projects. This would hurt prices even more.
Which projects are still under threat after the FTX crash?
With the crash of FTX, new projects have emerged that may struggle with their balance sheets. we request 3 projects which has raised many questions in recent weeks:
Solana had close ties to Sam Bankman-Fried’s businesses. As a result, doubts about the seriousness of the project have increased in recent weeks. Solana was criticized last year for several network crashes due to being overloaded with high transaction load.
Solana is one of the most used blockchains in the DeFi space and especially in NFTs (number 2 behind Ethereum). A Solana implosion would likely have the most severe impact on the crypto market. The Solana Foundation has now relied on transparency and released a document in which it admitted a loss of US$180 million. However, Solana’s reserves are still very high and the financial situation is not difficult.
While Solana seems to have been damaged by the FTX crash, she seems to have enough to survive. But above all, questions about crypto exchanges have multiplied in recent weeks. There are said to be a lot of financial difficulties, especially among the major stock exchanges. Crypto.com has been under particular attack, which like FTX has garnered attention through aggressive marketing over the past 1-2 years.
However, CEO Kris Marszalek has strongly denied rumors that his company is also struggling financially. He promised to increase transparency in the future and announced that the company’s balance sheets were very good. In the past few days, the price of the CRO token has also increased again.
Crypto lending has fallen into disrepute in recent months, primarily due to Celsius’ bankruptcy. Now, the largest crypto lending provider Nexo is also coming under fire. The company was founded in 2018 and now has 5 million customers.
However, according to an audit, Nexo currently owes nearly $2.8 billion to its customers. However, the assets are only worth $365 million, including $315 million in the form of its own Nexo tokens.
Nexo took a stance on Twitter and wanted to straighten out the numbers. But the situation brings back bad memories of the situation at FTX and as a crypto lender, Nexo is under particular scrutiny.
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