Of the biggest drama in the crypto land, web3 rock and roll, and Singapore's fintech drive
The biggest drama of the year in the crypto land unfolded in the past 48 hours with the sudden fall of FTX, the third-largest crypto exchange, and its billionaire founder Sam Bankman-Fried.
Earlier this Tuesday, Binance, the world’s largest cryptocurrency exchange, announced signing a non-binding letter of intent to buy its fierce, smaller rival FTX.com, which was struggling with a liquidity crunch. This news sent chills across the global crypto community.
However, a day later, Binance pulled out of the deal citing due diligence—which did not go well—and news reports of FTX mishandling customer funds and alleged US agency investigations.
That Binance is not going to save crumbling FTX has come as another shocker. While the crypto world recovers from the dual shock, we encapsulated what led to what.
The downfall of FTX started on Nov 6, with a tweet from Binance founder and CEO Changpeng Zhao, stating that he would sell all of his FTT holdings—the native token of FTX exchange—worth US$529 million due to the recent revelations. He was referring to a recent report from Coindesk that said Alameda Research, a trading house owned by Bankman-Fried, holds almost half of its net assets in form of FTT, instead of an independent asset like a fiat currency or another crypto.
What ensued was a bitter public spat between the two largest crypto exchanges on Twitter, with FTX indirectly accusing Binance of going after it with false rumors and Binance alleging, again indirectly, that FTX lobbies against other industry players behind their backs.
By the morning of Nov 8, FTX was hit with about US$6 billion in withdrawals, with its customers panicking like anything. As a result, the firm faced a severe liquidity crunch. Basically, it didn’t have enough money to cover all its customers who withdrew their crypto assets simultaneously.
This is when the FTX founder changed his stance, and showed his willingness to work with Binance.
In a tweet later that day, Zhao, who is also known as CZ, said FTX had asked for its assistance with the liquidity crunch, and hence, to protect users, Binance agreed to acquire FTX. The terms of the acquisition were not disclosed by US$300-billion Binance, but things didn't seem rosy for FTX, which was valued at US$32 billion this January.
As per a TechCrunch report, FTX's net crypto asset holding dropped by 83% by Tuesday. Overall, FTT tumbled by more than 70% to around US$5 and its market cap fell from US$2.97 billion to US$568.9 million. Meanwhile, the global crypto market cap dropped 10.85% to around US$900 billion.
As for Bankman-Fried, his US$ 16 billion net worth plunged 94% in just one day, the largest drop ever for a billionaire. The development is ironic because, till last week, FTX’s Bankman-Fried was a shining star of the crypto world, often referred to as a crypto kingpin, a savior, or a white knight.
That’s because he went around rescuing crypto companies that ran out of reserves in the crypto meltdown following the Luna crash in May. But now, he is one who needs saving.
As the news of FTX's collapse spread, murmurs grew that Binance’s CZ deliberately crushed FTX in order to buy it. This led to CZ clarifying on Twitter that Binance did not master plan it. And, on Thursday, Binance finally said the FTX acquisition deal was off the table.
On that note, let’s dive in for this week’s recap.
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Web3’s rock and roll
It always helps in fostering innovation when big players step up their investment in emerging technologies. This year, the promising new frontier, on which many giants are betting, is Web3.
Japanese mobile operator giant NTT Docomo is planning to invest between US$3.4 billion and US$4 billion in Web3 tech. The telecom giant will use the funds to set up a company that will develop blockchain-centered solutions. This comes barely a month after NTT Docomo created a dedicated unit, Qonoq, for metaverse with a budget of US$412 million.
In another positive development, Mastercard has announced a new batch of companies joining Start Path Crypto, its Web3 engagement program that helps blockchain, crypto, and digital asset startups scale. The global payment processing corporation will offer these startups mentorship, tech collaboration, and opportunities to expand into new markets, aside from access to its own customers.
Singapore’s fintech drive
Singapore’s central bank and financial regulator—the Monetary Authority of Singapore (MAS)—has just committed to investing US$106 million in the Financial Sector Technology and Innovation Scheme over the next three years. The seven-year-old scheme was introduced to innovate the country’s financial sector and has already received two rounds of funding from the government totaling US$211 million—with which it has aided 1500 projects. The newest funding will be invested in key industries like AI, analytics, regtech, and cybersecurity.
Elsewhere in Singapore’s fintech land, London-based plug-and-play fintech firm Weavr has entered the city-state. The four-year-old firm offers low-code embedded finance products to corporates that enable them to provide financial services to their customers. Earlier in February, Weavr.io raised a US$40 million series A round led by Tiger Global and it seems to be using those funds for its expansion plans.
The highs and lows this week
First, as usual, the lows. Layoffs, layoffs, and more layoffs.
Meta just revealed its plans to lay off 11,000 employees or 13% of its workforce. Twitter fired about half of its workforce—close to 3,700 people—but later reached out to dozens of people asking if they want to come back. Stripe is shedding 14% of its workforce which will shrink its employee base to 7,000, while Salesforce is looking to cut as many as 2500 jobs.
Asia is sadly mirroring this global trend. Indonesia-based KoinWorks has laid off 70 employees, or about 8% of its workforce, while India’s SaaS unicorn Chargebee and B2B unicorn Udaan recently axed 142 and 300 jobs, respectively.
On the high side, Indonesian e-commerce firm Blibli has become the third unicorn to list on the Indonesian stock exchange after Bukalapak and GoTo. While the company’s market debut was kind of lukewarm with its shares going up by just 2% by the end of day one of trading, its valuation crossed US$3.5 billion.
On the other end of the spectrum, several tech executives in Southeast Asia—including founders of Kenangan Brands (previously Kopi Kenangan), AyoConnect, Number Capital, BCG Singapore, and Kudo—have come together to form a new angel investment network called Kopital Network, which will focus on Indonesia and write checks for early-stage startups from all sectors.
Meanwhile, Singapore-headquartered health tech firm Speedoc has raised US$28 million in its pre-series B round. The five-year-old startup gives its users access to telehealth consultations, on-site doctor and nurse visits, virtual hospital wards, and ambulance-hailing services.