The ongoing FTX bankruptcy saga is causing significant stress among investors, according to an analysis released this week.
FTX, the cryptocurrency exchange which was once valued at around $32 billion, faced challenges in light of a CoinDesk report earlier this month about the capital reserves at the company as well as Alameda Research, a crypto hedge fund.
On November 8, FTX agreed to sell itself to Binance, a rival crypto exchange, following an announcement by that company’s CEO two days earlier that he would sell all of Binance’s holdings in FTT, a token created by FTX, which amounted to $580 million.
This development led to a major selloff and FTX ultimately ceased customer withdrawals due to a lack of funds.
Subsequently, Binance withdrew its bid to buy FTX one day later, citing the decision as a result of “corporate due diligence.” On November 11, FTX filed for Chapter 11 bankruptcy and CEO Sam Bankman-Fried announced his resignation.
In the midst of the company’s severe downturn, The Wall Street Journal reported that the Securities and Exchange Commission and the Department of Justice were investigating FTX’s collapse. The bankruptcy filing has also caught the eyes of federal prosecutors and Congress, with House lawmakers calling on leaders from FTX, Binance and Alameda to testify in December.
Advertising has played a key role in the rise and fall of FTX as well. A proposed class-action filed earlier this week named Bankman-Fried, NFL quarterback Tom Brady, supermodel Gisele Bundchen and comedian Larry David among several other celebrities and athletes who promoted the exchange in commercials and are accused of defrauding investors who lost money in the FTX collapse.
Nearly two-thirds of Americans say money is a significant source of stress, according to a study released by the American Psychological Association in February, and the ongoing FTX collapse is only adding to the situation.
According to Coin Kickoff’s study, which analyzed geotagged tweets from major cities around the world, New Mexico, Vermont and Wyoming represent the most stressed crypto investors in the U.S. New Mexico also topped the list of states with the highest amount of investors stressed about developments around FTX, followed by Maryland and Missouri.
Of the more than 20,000 available cryptocurrencies, Axie Infinity, Tether and Bitcoin accounted for the largest share of stressed tweets among investors. The price of Bitcoin has fluctuated wildly during 2022, dropping from a peak exceeding $47,000 in the spring to less than $16,600 as of Friday afternoon.
Notably, the study found that owners of FTX Token were the most worried about their purchase of any cryptocurrency.
“With real-world events and benevolent billionaires causing currency values to fluctuate, it’s no wonder that investors around the world find their cryptocurrency stock stressful to hold,” the report stated. “The market is rapidly changing, and it is unwise to invest in currencies without understanding how they work.”
