The crypto world is experiencing a historic crisis with the bankruptcy of FTX, the deposit and exchange platform for crypto assets. It was the fourth giant in the sector –becoming valued at 32,000 million– and, in just three days, it has left a million customers stranded, with a hole of 8,000 million dollars.
“It is a catastrophe, the worst crisis that the sector has experienced. It is as if BBVA, which is also valued at about 30,000 million, had disappeared from one day to the next and had left its clients without the possibility of recovering the money”, laments Eneko Knörr, investor in start-ups and co-founder of Onyze, digital asset custody company.
The worst, he warns, may be yet to come. The bankruptcy of this platform could cause a domino effect and bring down other exchange platforms. In fact, BlockFi is preparing to start the same bankruptcy process and Crypto.com, another popular platform, could go down as well.
It is not an unprecedented situation. In 2014, when the sector was in its infancy, the Japanese platform Mt. Gox also went bankrupt. It controlled 70% of bitcoin transactions and had a hole of about 500 million dollars. "That also triggered a serious crisis and then the sector took two years to recover its reputation," recalls the investor, who believes that now, in the best of cases, credibility will recover within a year. And he adds: “Another significant fact is that pension and venture capital funds that had started investing in crypto are now pulling out.”
Gone are the months of the pandemic during which bitcoin – and 10,000 other cryptocurrencies – skyrocketed in value, attracting thousands of customers from all over the world through mobile applications available to young and inexperienced people. The good prospects began to be cut short at the beginning of this year in a phenomenon that was dubbed the crypto winter. The Terra-Luna and Celsius platforms collapsed and leading companies such as Coinbase, Crypto.com or Gemini staged massive layoffs. According to data from Coinopsy, more than 2,000 cryptocurrencies have disappeared in recent years. And bitcoin, the queen currency, which is considered a refuge value in the sector, has seen its price collapse (see graph).
In this crypto winter, the FTX bankruptcy has been the worst gust of cold air. The point has been reached when voices are raised in favor of regulation. “The most purists will be against it because the intervention of a third party goes against the principles of blockchain technology, which supports the activity of cryptocurrencies, but the appearance of beach bars and fraud has highlighted the urgency of a regulation” , says Alex Fernández, founder of the Bitbase ATM company.
In the European Union, the hopes are in the MiCa regulation, which will enter into force in 2023. “The regulations will regulate transactions with cryptoactives, data management, identities and keys. In addition, each state must promote the creation of an independent regulatory body, solely dedicated to supervising the crypto sector, ”says Emilia Zaballos, lawyer and president of the Association of People Affected by Investments in Cryptocurrencies.
At the same time, Zaballos regrets that a legal vacuum persists in Spain despite the popularity that the crypto sector has gained among millennial consumers, as the Bank of Spain warned this week. According to calculations by this same body, in 2021 60,000 million euros were transacted, an average of around 1,300 euros per inhabitant. In this sense, Zaballos points out that the deregulation of the sector encourages the activity of fraudsters. "We estimate that in Spain there are about 8,000 affected," says the president of this entity, the largest in Spain. At the moment, there is no conviction, but there are several collective cases presented before the National Court. "We have denounced crimes of fraud, misappropriation, crimes against the public Treasury, identity theft or misleading advertising," says the lawyer, who pursues the allegedly fraudulent activity of platforms such as Algorithms Arbistar, Nimbus or Kuailian.
