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Sunday, December 4, 2022

FTX Ripple Effect: Coinbase Plunges 5% After Downgrade

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While BofA is confident that Coinbase is not another FTX, that does not “make the company immune to the broader consequences in the cryptocurrency market,” the bank notes.

“The analyst team sees three potential headwinds: lower trading activity thanks to weaker confidence in cryptocurrencies, delayed regulatory clarity, and the potential for contagion to have even broader consequences for the industry.“, these analysts explain, as echoed by Coindesk.

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The Bank of America downgrade has dealt a blow to Coinbase, considering that the bank had been bullish on other occasions. In January 2022, he gave the stock a buy rating and a $340 price target.

FTX’s significant debt

The judicial process of the bankruptcy of chapter 11 of FTX has begun and, like the Celsius case, this means that various data about the cryptocurrency exchange will be public, for this reason the existing debt with its investors as well as its clients is known.

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Filed bankruptcy documentation from FTX shows that Cryptocurrency exchange owes $3.1bn to its top fifty creditors. Normally, this type of investors are the first to receive any redeemed capital, thus showing a large deficit to be covered before a hypothetical reimbursement of funds to their private users.

Unfortunately, the documentation does not reveal the identity of the companies or people on the list of the top 50 shareholders affected by the FTX debacle, although the severity of the damage to their pockets was revealed. FTX’s top ten shareholders alone have more than $100 million each in unsecured claims, according to the filing, which equates to more than $1.45 billion combined.. In the documentation it is also known largest creditor bringing together a total of 276 million dollars and to his fiftieth largest creditor some 21 million dollars.

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umbrella. FTX filed for bankruptcy in a Delaware court.

As a particular fact, it can be deduced that the third party affected by the amount lost could be Genesis, a company dedicated to investing and trading crypto assets from institutional investors, since they stopped withdrawals claiming to have 175 million dollars trapped in FTX. The unnamed third specified position lost $174 million. Shortly after, they have confirmed the closing of a loan as a rescue of 1000 million dollars to stay afloat.

The FTX crisis has caused multi-billion dollar damage to both big and weak hand investors as this preliminary report shows the losses of the big holders but it could be just the tip of the iceberg since last week FTX revealed having more than a million creditors.

Source: Ambito

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