Indian Crypto Investors Look For Cover

Synopsis

The crypto rout over the past two days after Binance, the largest crypto exchange, said it was buying FTX, one of its closest rivals and then backtracked, has pushed Indian crypto investors looking for cover.

ET BureauImage used for representational purpose(This story originally appeared in on Nov 11, 2022)MUMBAI: The crypto rout over the past two days after Binance, the largest crypto exchange, said it was buying FTX, one of its closest rivals and then backtracked, has pushed Indian crypto investors looking for cover.

To cushion investors’ fears, top officials at crypto exchanges and other institutional stakeholders have come out to talk about the problems that led to FTX’s implosion and assured investors that a similar issue was unlikely to happen with the institutions they run.

Early on Wednesday, there was news that since FTX was in trouble and although its founder Sam Bankman-Fried had recently had a public spat with Changpeng Zhao, the founder of Binance, the latter was evaluating to buy out FTX, its closest rival. However, before the day ended Binance backtracked from the deal saying there were problems with FTX’s finances.

It also emerged that FTX had told some of its investors that unless it was able to raise money quickly, it would file for bankruptcy, creating an estimated wipeout of $28 billion worth of funds.

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View Details »This pushed the whole crypto wall into a tailspin with the value of most crypto currencies, including the leaders Bitcoin and Ether crashing by double-digits. As a result, globally the market cap of cryptos fell below the $1-trillion mark again after regaining that milestone in October.

In a Twitter thread, Ashish Singhal, co-founder, CoinSwitch Kuber, said that taking ‘irresponsible risks’ could prove costly for the risk taker. “As recent events have shown, when things go down, there are spillover effects in the wider market. This market-wide volatility could have been avoided had the exchange and trading firm involved done their fiduciary duties responsibly,” Singhal wrote.

On Thursday evening, prices of most of the cryptos had stabilised with Bitcoin at about $17,300 level and Ether at about $1,320.

Source

Updated: 11/11/2022 — 05:00