Tag: Crypto Exchange

Ken Griffin Speaks Out on Retail and FTX Collapse

Billionaire investor Ken Griffin, the founder and CEO of multinational hedge fund Citadel, warned that the collapse of cryptocurrency exchange FTX could weaken confidence in financial markets at large and hurt the ability of younger investors to save for retirement.

Ken Griffin told Fox Business, “FTX is one of these absolute travesties in the history of financial markets.” 

His remarks come less than a week after the implosion of FTX, which at its peak was the third-largest cryptocurrency exchange.

The firm’s bankruptcy may affect up to 1 million creditors and comes amid reports that at least $1 billion in client funds disappeared.

The Wall Street Journal is now reporting that ex-CEO Sam Bankman-Fried cashed out $300 million during a $420 million raise from several investors last year for personal use.

Sam Bankman-Fried is now facing a class-action lawsuit that was filed on November 11th, 2022.

Celebrities named in the lawsuit include Steph Curry, Shaquille O’Neal, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary who allegedly helped Bankman-Fried promote the exchange.

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Citadel’s Ken Griffin Says Retail Investors May Likely Ditch the Markets

Griffin expressed concern that losses sustained by younger investors who lost money due to FTX may make them less likely to invest their savings in capital markets, including traditional instruments like stocks and bonds.

“The confidence, though, of a generation in financial markets has also been shaken. That’s really awful because the 20-some-year-olds to 40-year-olds who are so engaged in crypto — they’ve got to save for their retirement, and if they don’t believe or trust in financial markets, this is a huge problem. They need to own stocks, they need to own corporate debt, they need to partake in our global capital markets,” Griffin said.

Citadel is currently partnering with Virtu, Schwab, Paradigm, Sequoia, and other Wall Street giants to form EDXM Crypto Exchange.

A cryptocurrency exchange that is supposed to provide transparency and lower transaction costs through the use of high liquidity and tight spreads.

But concerns are growing within the retail investor community as Citadel enters the crypto space, calling it an outrage due to the hedge funds’ long history of abuse of power.

“The bottom line is American investors have really gotten hurt here to the tune of hundreds of billions of dollars in decline in market cap in crypto over the last two years. I mean that really strikes at the entire core essence of what investor protection is all about,” Griffin said.

Source: Fox Business.

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Stock Market News, Crypto News, Franknez.com.
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Was The AMC FTX Token a Scam to Launder Money?

There are no signs of AMC Entertainment signing an agreement to the AMC FTX Token listed on the FTX crypto exchange.

When viewing the terms of service and terms of the tokenized stock product (AMC), users are prompted to error pages.

The AMC FTX token is also showing as an ‘invalid symbol’ on the platform with no live chart as we’ve seen in the past.

The tokenized stock was trading at $4 (USD) but has lost all its value since the company collapsed and filed for bankruptcy.

Retail investors are digging deep and are concluding that the crypto exchange could have potentially been using these tokens to launder money.

The FTX scandal only goes deeper into the rabbit hole.

Let’s discuss what happened.

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FTX Scandal: What Went Wrong?

What happened to FTX? FTX Scandal
What happened to FTX? FTX scandal | Crypto News.

Cryptocurrency exchange FTX filed for Chapter 11 bankruptcy on November 11, 2022, after the company’s valuation dropped from $32 billion to bankruptcy in only a matter of days.

The collapse of the cryptocurrency exchange dragged founder and CEO Sam Bankman-Fried’s $16 billion net worth to near-zero.

FTX was responsible for dropping the crypto industry below $1 trillion.

On November 16, a class-action lawsuit was filed in a Florida federal court, alleging that Sam Bankman-Fried created a fraudulent cryptocurrency scheme designed to take advantage of unsophisticated investors from across the country.

Which celebrities were affected by FTX?

Steph Curry FTX
Steph Curry FTX promotion | Celebrities affected by FTX crypto scandal.

Celebrities named in the lawsuit include Steph Curry, Shaquille O’Neal, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary who allegedly helped Bankman-Fried promote the exchange.

FTX became one of the largest crypto exchanges in just three years with a valuation of $32 billion.

Bankman-Fried used aggressive marketing, including a Super Bowl ad campaign, and the purchase of naming rights to the home of the Miami Heat basketball team.

He became known for his political lobbying and donations as well as for working to support the cryptocurrency industry more broadly.

As values plunged in early 2022, he facilitated deals totaling about $1 billion to bail out cryptocurrency companies struggling as a result of the declines in token prices.

Conflict of Interest Created Mass Selloff in FTX

How did Binance play a role in FTX collapse? Binance FTX news.
How did Binance play a role in FTX collapse? Binance FTX news.

FTX’s collapse took place over a 10-day period in Nov. 2022.

The catalyst for the crisis was a Nov. 2 scoop by CoinDesk that revealed that Alameda Research, the quant trading firm also run by Bankman-Fried, held a position worth $5 billion in FTT, the native token of FTX.

The report revealed that Alameda’s investment foundation was also in FTT, the token that its sister company had invented, not a fiat currency or other cryptocurrency.

That prompted concern across the cryptocurrency industry regarding SBF’s companies’ undisclosed leverage and possession of assets.

Here’s when things really started going downhill for FTX.

Binance, the world’s biggest crypto exchange, announced on Nov. 6 that it would sell its entire position in FTT tokens, roughly 23 million FTT tokens worth about $529 million.

Binance CEO Changpeng “CZ” Zhao said the decision to liquidate the exchange’s FTT position was based on risk management, following the collapse of the Terra (LUNA) crypto token earlier in 2022.

By the next day, FTX was experiencing a liquidity crisis.

Bankman-Fried attempted to reassure FTX investors that its assets were stable, but customers demanded withdrawals worth $6 billion in the days immediately following the CoinDesk report.

Bankman-Fried searched for additional money from venture capitalists before turning to Binance.

The value of FTT fell by 80% in two days.

Sources: Investopedia.

FTX: A Pyramid Scheme Created from Mass Marketing?

FTX Pyramid Scheme
Was FTX a pyramid scheme? Crypto news and more.

Within hours of filing for bankruptcy, FTX was hacked.

The exchange noted that ‘unauthorized transactions’ close to half a billion dollars in total were stollen from several wallets during a period of days.

Since the incident, regulators of the Bahamas have frozen FTX’s assets, and the company has strongly advised against customer deposits.

What’s occurred with FTX is an ongoing investigation and lawsuit against now ex-CEO Sam Bankman-Fried.

So, was FTX just a scam to laundering money through the use of unauthorized stock tokens and covered by the hack that occurred?

Or was this just a poorly managed incident that occurred without motive?

I’d love to hear your thoughts on this.

Leave a comment down below.

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Citadel to Launch Crypto Exchange After FTX Collapse

Citadel is partnering up with Charles Schwab, Fidelity, Sequoia, Paradigm, and Virtu to launch EDXM, a cryptocurrency exchange.

The fall of FTX was primarily due to centralized players so what’s to say EDXM won’t be subject to such errors?

EDXM’s custody and wallet technology is being provided by crypto custody and infrastructure company Paxos, the companies announced in October.

Paxos, which is a custodian regulated by New York state, holds customer accounts in fully segregated accounts and has signed up large consumer-facing clients to enable crypto trading.

Its customers include PayPal, broker dealers such as Interactive Brokers, and others such as Nubank and Mastercard.

Crypto is still a taboo area for most of Wall Street, but with companies such as Citadel and its partners, it could attract big institutional money.

Here’s the latest crypto news.

Related: How to Invest in Cryptocurrency for Beginners

What is EDXM?

Citadel to launch crypto exchange EDXM
Citadel to launch crypto exchange EDXM.

EDXM is a new crypto exchange being developed by Wall Street giants such as Citadel, Virtu, and Fidelity for digital assets such as cryptocurrencies.

EDXM plans to offer delivery settlement versus payment settlement, a settlement method that’s used in traditional securities trading.

Other promises include extremely low transaction fees due to tight spreads enabled by greater liquidity.

The crypto exchange is also supposed to be different from some other crypto providers that are the market maker, exchange, and custodian all in one, which can be a conflict of interest and is typically not done in traditional markets.

Sort of like how Citadel is a market maker, hedge fund, and dark pool.

The head of strategy at Paxos says EDXM will provide transparency for the crypto market.

Some investors might argue that Citadel and its partners should provide more transparency in the stock market first before making such claims for the cryptocurrency market.

While some on Wall Street might think EDXM could lift the crypto industry, others look at the partnership as a means for Wall Street to take advantage of investors elsewhere.

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