Crypto Flipsider News – FTX Update; Authorities Open Probe; Sequoia Zeros FTX; $900m SOL Unlocked; DeFi TVL Plunges

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Read in the Digest:

• Binance pulls out of FTX deal, Justin Sun announces potential partnership

• Authorities open probes into FTX’s collapse, crypto execs call for clearer guidelines

• Venture capitalist firm, Sequoia, marks down its entire FTX investment to $0

• Solana ecosystem shakes SOL worth $900 million, prepares to be unlocked

• DeFi TVL feels the brunt of FTX’s liquidity crunch, TVL falls to 20-month low

Binance pulls out of FTX deal, Justin Sun announces potential partnership

Sam Bankman-Fried’s crypto exchange, FTX, fell into one of the biggest liquidity crunches after Binance’s CEO, Changpeng Zhao announced that his company was going to sell all its FTX Tokens (FTT), worth $529 million.

Binance proceeded to propose a deal to acquire FTX after the exchange imploded. However, on Wednesday, CZ announced that Binance will no longer follow through with the deal as FTX’s issues were beyond their ability to help.

However, just hours after the Binance boss called off the deal, it was reported that Justin Sun, the founder of the Tron crypto, was in talks with Bankman-Fried. The news was later confirmed by Sun’s tweet.

Sun took to Twitter to announce that he and the team have “been working around the clock to avoid further deterioration.” Sun also tweeted they were putting together a solution, which has been liked and retweeted by SBF.

Flipsider:

• Top crypto exchanges are committing to a proof of reserve system to prevent the future reoccurrence of a liquidity crunch.

Why You Should Care

Sun looks to end the FTX crisis as the ongoing liquidity crunch is harmful to the industry’s development and investors alike.

Authorities open probes into FTX’s collapse, crypto execs call for clearer guidelines

FTX’s implosion has drawn the attention of U.S. regulators, who have reportedly opened probes to determine whether the beleaguered crypto-exchange mishandled customer funds.

The Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Justice Department are all investigating FTX. The SEC’s probe into FTX.US and its crypto-lending activities started months prior.

The CFTC is investigating FTX’s relationship with its sister entity, Alameda Research and FTX.US. However, top crypto execs have blamed authorities for the collapse. Coinbase (NASDAQ:COIN) CEO has highlighted the lack of regulatory clarity in the United States.

Backing Brian Armstrong, Ripple CEO Brad Garlinghouse highlighted the regulatory framework in Singapore. Circle’s CEO Jeremy Allaire added that the lack of a proper regulatory framework leaves users exposed to overseas supervisory.

Flipsider:

• The calls started from the anti-crypto Senator Elizabeth Warren, who demanded more “more aggressive enforcement” of crypto, as it “appears to be smoke and mirrors.”

Why You Should Care

The implosion of FTX could intensify the enforcement of crypto regulations in the United States and other countries.

Venture capitalist firm, Sequoia, marks down its entire FTX investment to $0

As bankruptcy looms over FTX, venture capital firm Sequoia Capital revealed in its latest note to investors that it will mark down its investment of over $210 million in the exchange as $0.

However, the venture capital firm notes that the “full nature and extent of this risk is not known at this time.” While it has marked its investment as $0, Sequoia says it would continue monitoring the situation.

Sequoia Capital was the biggest investor in FTX’s $900 million Series B investment round in July 2021. Sequoia’s announcement comes as rival crypto exchange, Binance, backed out of a proposed deal to purchase FTX.

In its note to investors, Sequoia reassured its partners and investors that the writing off of its FTX investment as zero wouldn’t be detrimental to the fund, as it accounted for less than 3% of its capital.

Flipsider:

• FTX’s liquidity crunch has drawn the attention of authorities, with the U.S. Department of Justice and the SEC reportedly launching investigations.

Why You Should Care

Sequoia Capital has decided to mark its investment as zero because the liquidity crunch has created a solvency risk for FTX.

Solana ecosystem shakes SOL worth $900 million prepares to be unlocked

The majority of the crypto market has been in the red zone this week as reports revealed loopholes in Sam Bankman-Fried’s empire. However, Solana has taken the biggest hit, as it was one of the assets held by the struggling Alameda Research.

As a result of its relationship with FTX, Solana (SOL) has fallen 60% over the last seven days to a current price of under $13 per token. This includes a 45% price drop over the past 24 hours.

The 7-day price chart for Solana (SOL). Source: CoinMarketCap

However, things still look gloomy for the Solana ecosystem, as over 54 million SOL (worth approximately $800 million) will be unlocked at the end of Epoch 370 on November 10th, 2022.

The SOL tokens that will be unlocked represent almost 15% of its total supply. Today’s decline is sparked by fears that the imminent unlocking of SOL will be followed by massive volumes of the token dumped on the market.

Flipsider:

• Solana co-founder Anatoly Yakovenko is looking to rally community support for the struggling SOL, tweeting “chewing glass is in our DNA, and we’ll get through together.”

Why You Should Care

With Solana already the second-worst performer, only behind FTX Token (FTT), it remains to be seen how the unlocked token will affect the price of SOL.

DeFi TVL feels the brunt of FTX’s liquidity crunch, TVL falls to 20-month low

The decentralized finance (DeFi) ecosystem has not been immune to the market crash induced by the liquidity crunch of FTX. Its total value locked (TVL) fell alongside the prices of crypto assets.

The total value of cash locked in DeFi dropped by more than 12% on November 9th and is down by 11.64% over the last 24 hours. The TVL of the entire DeFi sector now stands at $43.48 billion.

The total TVL is now at a 20-month low and down nearly 75% from its all-time high. This is a huge fall for one of the sectors that had always been a solid pillar in the nascent crypto industry.

Solana’s TVL has taken the biggest hit, dropping by more than 50% due to its exposure to FTX. Solana’s TVL now stands at $434.17 million, a far cry from its all-time high of $10.17 billion on November 9, 2021.

Flipsider:

• Despite the recent challenges, Solana Lab’s co-founder Anatoly Yakovenko has reiterated his bullish stance on the network, highlighting the quality of builders and recent network-level improvements.

Why You Should Care

The plunge in DeFi TVL is a result of individual blockchain tokens taking a hit because of the FTX collapse. However, DeFi is known to recover faster than cryptos.

See original on DailyCoin