FTX fallout (pt2) + All the Web3 news you missed this week
Has anyone else had a million conversations like this over the past few weeks?
"Yes Auntie, I heard about FTX, I know its crazy”
“Thanks for sending me that Coindesk link Dad, I’m aware that the price of Bitcoin is down”
“No Grandma, I didn’t hear what Jim Cramer said yesterday about crypto”
I suspect I’m in for a few more weeks (months?) of questions we feel the consequences of FTX’s bankruptcy. “Contagion” is the word on the street. Directly and indirectly, the crypto giant’s collapse is sending shudders — and causing shutdowns — throughout the industry. Here’s a sampling of this week’s fallout.
The crypto lender BlockFi, which had been kept afloat by a revolving line of credit from FTX after the meltdown of Three Arrows Capital this summer, is on the brink of bankruptcy and gearing up for layoffs. Alameda-backed Maps.me and Oxygen said in a statement that FTX was a custodian for more than 95% of their overall token supply, leaving the DeFi projects to “[consider] all options” to protect themselves. The Winklevoss-founded crypto exchange Gemini froze withdrawals from its yield-earning program on Wednesday, the same day that Gemini outflows hit $563 million against inflows of just $78 million. Genesis Global Trading suspended loan redemptions and originations, as withdrawal requests exceeded the investment bank’s liquidity. Total value locked on the Solana network plummeted from $1 billion in early November to $300 million this week.
Meanwhile, the legal ramifications of FTX’s implosion are unfurling. Investors filed a class action lawsuit against FTX, Bankman-Fried, and a number of FTX’s celebrity ambassadors, including Tom Brady, Stephen Curry, Larry David, and Gisele Bündchen.
On a more ideological level, a widespread loss of faith in crypto could discredit the entire Web3 space. In order for founders to stand a chance of winning back skeptics, they will need to convince users that Web3 is about more than “buying cheesy-looking NFTs and losing money on tokens,” writes Scott Rosenberg — in the same way that Internet companies made it through the dotcom bust by providing actual utility to the public.
Stay tuned as things evolve over the next few weeks. An now onto the other Web3 news you missed this week
Here’s the Web3 news from the past week
The combined effects of the crypto winter and FTX’s meltdown are hurting the celebrity-beloved Bored Ape Yacht Club, which has seen its floor price drop 33% since the start of November. Twice this month, its NFT floor price, previously in the millions, has dropped below $60,000.
Perfect timing. Despite the chaos in the crypto space, Nike is moving forward with its Web3 platform, .Swoosh, which will let users buy, sell, and trade virtual Nike shoes, jerseys, and accessories. Signups open November 18, with the first collection dropping in January.
Apple is hiring engineers to produce 3D graphics and visual effects for augmented and virtual reality, according to several job postings. The company has yet to announce a mixed-reality headset, though one is widely anticipated and expected to have “12 cameras to show the wearer real-time video of the outside world.”
The collapse of FTX has created further challenges in the push for crypto regulation, says Lisa Braganca, a former SEC official. “I have serious doubts still about whether Congress wants to step in and do something rather than letting the SEC and the CFTC (Commodity of Futures Trading Commission) figure it out,” Braganca told CoinDesk, noting that lawmakers aren’t prepared to handle crypto regulation on their own.
Following FTX’s bankruptcy filing, Secretary of the Treasury Jannet Yellen called for greater oversight of the crypto sector. According to Yellen, a Treasury Department report published in October “identified many of the risk factors at play in FTX’s collapse and subsequent bankruptcy, implying that had those reports turned into policy, the calamity could have been prevented,” writes Decrypt.
On Thursday, lawmakers announced that Sam Bankman-Fried, Binance, and Alameda Research will testify at a hearing on FTX’s unraveling. “The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds,” lawmakers wrote in a statement.
In case you missed it - this was the most opened article from last week’s news roundup
The Positive Cultural Impact of Web3 (RollingStone)
Web3 could be a “better alternative” to social media, enabling creators to connect with fans directly while allowing fans (rather than record labels or film studios) to take an ownership stake in creators’ projects. “The cultural relevancy and economic potentials of internet communities have become more evident with Web3,” writes Brian D. Evans.
Hi, I’m Andrew Chang - I created the Web3 Roundup to share what I’m learning in this space. I’ve spent my career at the forefront of the technology industry in areas such as crypto/blockchain (Former COO @ Paxos, co-founding partner of Liberty City Ventures), video and adtech. I learn by meeting with founders, investors and other thought leaders and approach Web3 with the same enthusiasm – and skepticism – I had about crypto/blockchain technologies 10 years ago.
You can connect with me on LinkedIn