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Is the crypto FTX failure contagious?

Are cryptocurrencies getting dragged down by the failure of FTX? In this article, we explore a possible domino effect in the crypto world.

Person working at night representing crypto failures

It’s too soon to call it, but it looks like another crypto giant is circling the drain. 

Genesis is frantically seeking counsel from restructuring firms and bailouts from investors to stay afloat in the wake of fevered cashouts from their users, rising anti-crypto sentiments, and the fall of FTX.

Guess fortune cookie marketing can only take you so far. 

Genesis points directly to FTX’s tanking as the main cause of their withdrawal woes. FTX going under, according to them, has scared their users into withdrawing all of their funds, causing their issues with liquidity and need for a conversion freeze for their base and a bailout for them. While there may yet be some Hail Mary play that keeps them from hitting that critical ‘submit’ on a bankruptcy claim, watching them teeter is not something I do with much optimism.

Watching a company beg for extra money because they can’t keep customers’ confidence, is kind of like seeing a wounded deer asking for the ability to keep living directly in a four-lane road. 

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Cards on the table time – I don’t like, plan to not yell at my parents if they invest in, or trust crypto. Disclosing my biases is always important, it’ll either get people to stop reading this immediately or prevent people from going through the rest of my articles to sniff out my motives. 

…wait, why am I doing this again? 

Well, it’s the right thing to do. And from the looks of things, my penchant for (over)disclosure puts me streets ahead of the people lining up to fleece everyone who had the capacity to be excited about new methods of investing. 

But I’m honestly assuming these kinds of things are going to keep happening, and my prediction is that each failure is going to predicate more failures in this industry. Here’s one quasi-Luddite gyal’s opinion on why the clay feet are crumbling in the first place. 

1: You can’t buy anything with this pseudo money. Statements about corporations and countries moving to crypto were all found to be either total exaggerations or incredibly unstable not long after

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Even smaller-scale sellers were asked to put stickers on their windows with the idea that the appearance of crypto’s acceptance would eventually usher in a wave of POS systems and business owners ready to deal. 

It didn’t work out that way. 

For sellers that DO take crypto as payment, either their backends are set up so that merchants receive fiat money in exchange for cryptocurrency, OR you purchase something so super luxe that it’s a lock the merchants in question can weather any funding storms caused by the crypto minority. 

Imagine Lamborghini or Patek Phillipe going under because of a Bitcoin hiccup. Now that’s rich.  

2: The lack of regulation means you’re signing…just about anything. 

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I can’t trust the feds to keep me safe, look at everything ever. But I can trust them to swoop in for their cut of any fines if their rules are broken. That’s why the lack of regulation over crypto just means you’re open to getting screwed just like with banks, but with no means of your screwers getting even a hand smack.

Enthusiasts hear ‘Lack of regulation’ and assume it’s farmers market jam non-regulation. No enforcers from The State should be going into Ol’ Blackberry Joe’s kitchen to ream him about a spider or two in the corner. 

But really we’re dealing with old-school bootlegger nonregulation. You might get pure moonshine if you were first in line. You might hooch cut with water. It might be cut with embalming fluid. Whether you go blind, ulcerous, or dead isn’t anyone’s business but yours, and you signed up for it. And more people are realizing that, which leads us to where we are now. 

3: The common man is getting wise. We’re dealing with a combination of The Long Tail effect and the fact that Innovators and Early Adopters are already out of the equation just due to how the passage of time works. And we’re dealing with a wave of people who lost their entire savings to either shifts or outright grifts telling their stories. The cat’s not going back in the bag, the emperor has no clothes, and now we’re all watching companies giving it their all to sell non-enthusiasts on a sharp, angry animal and a naked old man. 


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It’s just not flying as well, and that bodes poorly for many crypto company heads. 

I’ve been wrong before, and we’ll see where this goes. But if I were a betting lady, my money’d be on more companies dragging each other down as each toppled branch falls another. Then again, if I were a betting lady…I might have bought some crypto in the first place.

You can't spell "Together" without TGOT: That Goth Over There. Staff Writer, April Bingham, is that goth; and she's all about building bridges— both metaphorically between artistry and entrepreneurship, and literally with tools she probably shouldn't be allowed to learn how to use.

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