Cryptocurrency has been heralded by some as the future of digital payments, without the overhead of a central bank or government. However, at least some overhead might be needed, if the past few weeks have been any indication.
The current chain of events started with the collapse of FTX, a company that operated one of the largest cryptocurrency exchanges in the world — it had a partnership with GameStop and an advertisement during the last Super Bowl. However, after reports came out that the company was missing billions of dollars, it declared bankruptcy. The new CEO in charge of restructuring FTX called it “a complete failure of corporate controls.”
Much like the non-crypto financial system, other cryptocurrency exchanges and lending companies are invested in each other, so the collapse of FTX has led to other problems. The Huobi exchange told shareholders that it had $18.1 in crypto assets tied up in FTX. Multiple crypto exchanges have stopped customer withdraws because they do not have the money, including Genesis, Digital Surge, and Coinhouse. Bloomberg reports that Genesis, another major exchange, may go into bankruptcy.
The collapse has understandably eroded more people’s confidence in cryptocurrency as a whole — crypto or not, if you put your money somewhere and can’t retrieve it later, that’s a big problem. Bitcoin has lost 16.2% of its value over the past month, and 71.43% in the last year. Ethereum’s value has decreased by 9.5% in the past week.
If you’re determined to stay in the crypto ecosystem, it might be a good idea to transfer (at least some of) your funds to a hardware wallet, where it can’t be used as a slush fund by an exchange. Your crypto will probably continue declining in value, though.