One of the biggest stories in crypto this week has been the collapse of FTX, a top-rated crypto exchange led by Sam Bankman Fried.
The FTX collapse exposed a fragile crypto environment and, in fact, led to a mini crash in most cryptocurrencies. As investors try to limit their exposure, Bitcoin has fallen below $16,000 for the first time in years.
Nonetheless, several major gamefi projects have moved to assure their communities that all is well. More on this later.
The FTX Collapse: What Happened?
For now, FTX is filing for bankruptcy. It’s a big surprise, to be fair. FTX had managed to establish itself as one of the leading exchanges in the world. So, what happened there?
Shortly before filing for bankruptcy, FTX released a balance sheet of all its assets. The sheet shows that the exchange had liabilities of around $9 billion. It also held $900 million worth of liquid assets, including cryptocurrencies like Tron and other stablecoins.
As the crypto market retreated and coins dropped to new lows, these liquid assets have literally been wiped out.
This Bloomberg article also reports that there were numerous unauthorized withdrawals shortly after the bankruptcy was filed. It is estimated that around half a billion dollars were withdrawn from several wallets.
There is still a lot we don’t know about the FTX collapse. However, reports suggest that Bankman was completely overextended, and the collapse was actually inevitable.
Regardless of the reasons, the FTX bankruptcy has rocked the crypto boat, and most investors are genuinely worried.
GameFi Projects Distance Themselves
As news of the FTX bankruptcy broke, several major Gamefi and P2E projects moved to clear fears among community members. This is because of the fact that it seems highly unlikely that anyone who had assets in there will get them back.
Sweat Economy, a leading M2E app, was among the first few projects to come out and explain their exposure in FTX. Sweat noted that while it had some exposure, it was too small to have any effect on the project.
Sweat Economy has very small exposure to FTX and Alameda. @oleg_fem will host AMA on Fri to answer questions.
Exposure is very small. On FTX, we have 16.7M SWEAT (about $260k worth). We hold about $143k in USDT. This together is a fraction of Sweat Foundation’s total treasury.
— Sweat Еconomy 💧 (@SweatEconomy) November 9, 2022
The M2E app noted that it had about 16.7 million SWEAT tokens in FTX, translating to $260 000. The project also added that it had $143,000 worth of USDT.
It is unclear if the move-to-earn project could get these assets back. But as the tweet above suggests, the exposure is not big enough to affect the Sweat Foundation treasury.
Sweat also added that it has no exposure to Alameda Research. The quantitative trading firm and market maker was a key actor in FTX and its operations.
The current bankruptcy filing, in fact, affects both FTX and Alameda. Nonetheless, Sweat Economy made it clear to its community that it had zero exposure in Alameda.
No further exposure to FTX or Alameda. Alameda has never been one of our market-makers and we are not aware of them holding any SWEAT. We do not hold any FTT token in our treasury.
We will continue to rebalance our positions, holding enough assets on CEXs to provide liquidity.
— Sweat Еconomy 💧 (@SweatEconomy) November 9, 2022
Immutable Sets the Record Straight
Sweat Economy is not the only gamefi project to set the record straight on the FTX collapse. Immutable X, one of the leading web3 infrastructures for NFTs and gaming, has also come out with a statement.
According to a tweet by Robbie Ferguson, the co-founder of Immutable, the platform had no exposure in FTX. Robbie also added that Immutable does not use any financial leverage.
An update on recent events:
1. @immutable does not hold any funds on FTX, nor has lent Alameda or FTX any assets.
2. We do not use financial leverage at immutable. We are here to change digital ownership, not run a crypto hedge fund.
3. Our cash runway is > 3.5 years.1/n
— Robbie Ferguson 🅧 – Hiring! (@0xferg) November 12, 2022
As for the future, the Immutable X co-founder acknowledged that these are difficult times for the crypto market. However, Immutable has always been built regardless of market conditions.
In fact, Immutable was launched during the height of the 2018 crypto crash, and to this date, it has not stopped. Besides, the project says that it has enough cash to run for nearly four years.
This keeps it in a very good position to fight off any negative market sentiment and build a robust ecosystem of web3 games and NFTs.
What now?
.@immutable started building at the start of the bear market in 2018 and we haven’t stopped since.
We’re obsessed with enabling players to own their digital items in games via NFTs. We won’t stop until digital ownership is the norm, not the exception.
2/n
— Robbie Ferguson 🅧 – Hiring! (@0xferg) November 12, 2022
What Happens Next for FTX?
Once the bankruptcy is completed, there will be a lot of questions for Sam Bankman Fried. How did we not see this coming? The collapse of FTX is also leading to renewed calls to begin implementing serious regulation in the crypto industry.
Whether this will happen soon remains to be seen. However, the most dedicated crypto enthusiasts have always known that crypto regulations will come into play at some point.
The collapse of such a prestigious exchange like FTX could be the final catalyst that pushes Congress to act.
As for people who had exposure to FTX, it will be very hard to get these assets back. There could be lawsuits, of course, but so far, it is clear that FTX and Alameda are done for good.
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