FTX and systemic risk
It was revealed early on the 9th that the crypto asset (virtual currency) exchange FTX had fallen into a liquidity crisis and had reached a basic agreement to be acquired by a major competitor, Binance, for the purpose of protecting users.
However, the target of the acquisition is “FTX.com,” which operates global business, and does not include the US corporation “FTX US” or the Japanese corporation “FTX Japan.” In addition, the signing of the intention to acquire the company is not legally binding at this time, and Binance will first conduct a detailed due diligence (investigation) on FTX’s financial and management situation within a few days.
According to Coinpost-affiliated media The Block, FTX had sought outside capital at a valuation of $10 billion to $20 billion before reaching an agreement with Binance. That number is well below the $32 billion valuation at the time of FTX’s $400 million Series C round in January 2022.
FTX’s sister company, trading firm Alameda Research, is also believed to be heavily indebted.
According to the balance sheet (B/S) information of Alameda leaked by US CoinDesk, as of June 30, it had assets of $14.6 billion and liabilities of $8 billion, most of which were issued by FTX. Tokens such as native token FTT, low liquidity SRM, MAPS, and OXY. On November 9th, the value of FTT temporarily fell by 83%.
These problems could also affect the balance sheets of investment firms and major trading partners who hoped for the growth of the FTX exchange, and could spread to the entire cryptocurrency industry. In this article, we will summarize the businesses and investee projects that have a capital relationship with FTX.