In the existing digital world, cryptocurrency is not a term that needs description since everyone is aware of its importance and role in the financial landscape. It has always been the talk of the town for its revolutionary Decentralised Financial (DeFi) model and unbeatable transaction speed. However, some events converged the spotlight towards crypto, indicating the possibilities of fraud and hazardous crypto-related activities.
2022 was the year when the FTX founder and former CEO, Sam Bankman-Fried, found himself in controversy, accusing him of fraudulent activities with investors’ money. CoinDesk published a story inspired by a research of Alameda Research about Sam’s involvement in frauds, leading to a surge in withdrawals of money from FTX, followed by legal action against Sam Bankman-Fried.
The charges against the CEO and top executives of FTX reflected a fraudulent activity of around 8 billion U.S. dollars. During the court trial, Sam was found guilty of the crime, leading FTX to an abrupt exit from the crypto market, which stood as a tough competitor for its rival crypto exchanges. Let’s unravel the aftereffects of Sam’s activities on the crypto market.
Quick Link: Bankruptcy Case Concludes for Celsius Network, One of Crypto’s Major Failures
Sam Bankman-Fried’s Court Trial
The shaggy-haired crypto king, Sam Bankman-Fried, is the person behind a major criminal activity causing investors to lose billions of dollars in his crypto exchange, FTX. It is one of the biggest financial frauds in crypto history, which cost Sam his 26 billion U.S. dollars fortune as compensation alongside life behind bars.
Earlier, Sam was accused of fraud after his company, FTX, filed for bankruptcy. The FTX CEO did not plead guilty, initiating a jury trial that lasted for a month. With a jury consisting of nine females and three males, Sam Bankman-Fried was found guilty of money laundering and fraud charges. You can explore further about the court trial by clicking here.
The arrest of Sam and his top executives at FTX resulted in the abrupt and quick exit of a well-established crypto exchange, FTX. It promoted a lack of trust in the crypto landscape, which resulted in weakening the crypto market trading volume.
The Abrupt Downfall of FTX and the Crypto Market
The continuous backlash cryptocurrency faces is a result of several negativities connected to cryptocurrency, including financial scams, illegal funding, money laundering, and much more. Due to these reasons, FTX suffered from a massive nemesis. During the fall, FTX requested financial help from Binance to tackle the consistent withdrawals of funds from users.
Binance is also one of the biggest crypto platforms, but a surprising $4.3 billion has been fined. Binance has agreed to pay the fine, with its CEO resigning from the top position. All these events reflect the disadvantageous side of the crypto market with consistent violations of laws and regulations.
If the negative events continue to happen, the remaining trust people and investors have in cryptocurrency will fade away. It will lead to the end of the financial revolution that cryptocurrency has projected in our minds. The toppling of crypto exchanges and industry leaders signals the weakening of cryptocurrency, which must be avoided.
The Crypto Market Has Moved Past FTX Downfall
After the event of Sam’s arrest and court trial, the crypto market suffered a massive wave of downfall. Prior to that, the crypto market was on track for revival, coming out of the Crypto Winter, but the FTX incident created chaos and a lack of trust among crypto enthusiasts. Thus, the crypto market degraded once again.
However, the market has started gaining pace in terms of success and market capitalisation. Despite the complete shutdown of FTX, other crypto exchanges are doing well, offering their services effortlessly and smoothly. Due to the revival of the crypto market, Binance achieved an astounding 3,366 billion U.S. dollars in trading volume this year as of November 2023.
Given these mesmerising figures of trading volume only on Binance, it is clear that the crypto market is back on its feet, moving on from the tragic event of Sam Bankman-Fried’s fraud of billions of dollars to traders and investors. Here are a few reasons why crypto is not doomed at the moment.
1. An End to Crypto Winter
Crypto Winter has seized the potential of the crypto market, lowering crypto prices. Every cryptocurrency has suffered from this phenomenon, which seems to be at the end. Bitcoin, the pioneer crypto, is all set to get back to its all-time high price. 2023 is the best year after 2020 regarding its value.
Furthermore, thanks to its DeFi model, cryptocurrency has other functionalities than digital payments. It is one of the key fighter tools against cybercrime due to its blockchain technology, providing crypto with a state-of-the-art security system. It has helped solve several cybercrime cases, which you can explore here.
2. Revival of Crypto Market Cap
The crypto market capitalisation upticks after the FTX event. In 2021, the crypto market cap was at the highest value of 3 trillion U.S. dollars. Following the FTX tragedy, it reached 796 billion dollars, which is the lowest value in two years.
However, it regained momentum, reaching a $1.35 trillion value, where Bitcoin’s revival plays a crucial role. Furthermore, crypto and blockchain technology contribute significantly to revolutionising the banking system.
3. Possibility of FTX 2.0
A comeback for the industry-leading crypto exchange, FTX, is expected as board members are trying to make their way back into the market. The administrators contacted many bidders, hoping to find a way to reboot FTX. However, the Security and Exchange Commission (SEC) chairman, Gary Gensler, suggested they ensure working as per the law to make a successful comeback.
Crypto Market Can Prosper Despite the FTX Downfall
Cryptocurrency has been here for some time, and it has attracted tens of thousands of users and stakeholders, paving the path for crypto exchanges to prosper in this growing space. FTX was among those high-performing crypto exchanges that suffered badly after the Sam Bankman-Fried incident.
This event resulted in negative fluctuations in the crypto market, but the gloomy days are over. The crypto market faces a rise in its value, entering the bullish phase. Thus, the crypto market has moved from the FTX downfall to prosperity.