NEW YORK/LONDON : With major cryptocurrency exchange FTX on the brink of collapse, some investors are beginning to question the viability of a sector already bruised by the bitcoin bubble bursting and closures of key market players.
"From a financial side, it's fair to say that confidence is going to be somewhat shaken because if you can't trust FTX then what can you trust?" Yat Siu, co-founder of Hong Kong-based investor Animoca Brands, told Reuters on Wednesday. "Now that the balance sheet strength of Alameda Research and FTX is under question only a few months after being perceived as strong balance sheet entities, it creates a confidence crisis and reduces the appetite of other crypto companies to come to the rescue."
In the case of FTX, U.S. residents can't trade on its global platform due to strict regulations for the crypto space in the United States. FTX has a U.S. partner, FTX.US, but its offerings are more limited than the global platform. "The show must go on, the industry needs to keep growing, but it's definitely a step-back in itself when you see the poster child of the industry being put in this position," said Jean-Marie Mognetti, chief executive of crypto asset manager CoinShares.