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BlockFi and the “FTX Domino Effect” - Episode 304 - by cryptohunt.it
BlockFi and the “FTX Domino Effect”
Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.
You heard the term here first: The “FTX Domino Effect”. It's time we coined the term, because one by one, crypto companies affiliated with the now collapsed exchange FTX are falling.
This week's victim: BlockFi, a crypto trading and lending firm. At the core, BlockFi didn't do anything too different from your average bank: You could put your crypto in their savings account, and they'd pay you interest on it.
But it helps to understand how that worked: Like a bank, they would take your money and invest it somewhere else. That strategy works well, but only if those investments pay off. Which they never do forever, and BlockFi took risks that were much higher than a normal bank.
So BlockFi was hit hard. First, it got into trouble by having invested in Luna, the stable token that famously crashed over night. And then, as crypto winter unfolded, FTX and Sam Bankman-Fried bailed them out. But instead of giving them actual money, they gave BlockFi their FTT token... which, as we all know by now, recently collapsed when FTX went down.
In the end, BlockFi ended up owning everyone money, with no way to pay it back, and had to file for bankruptcy. The saddest part for sure: That consumer probably thought that their money was safe.
Now you see why we call it the FTX Domino Effect. We sincerely hope you are not affected by the latest domino falling, and maybe this podcast is giving you a reason to evaluate all the places you have your money parked. There will be more dominos to fall.
This podcast is produced by Cryptohunt.it, the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, design is done by Carmen Rincon, and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.
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By cryptohunt
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BlockFi and the “FTX Domino Effect”
Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.
You heard the term here first: The “FTX Domino Effect”. It's time we coined the term, because one by one, crypto companies affiliated with the now collapsed exchange FTX are falling.
This week's victim: BlockFi, a crypto trading and lending firm. At the core, BlockFi didn't do anything too different from your average bank: You could put your crypto in their savings account, and they'd pay you interest on it.
But it helps to understand how that worked: Like a bank, they would take your money and invest it somewhere else. That strategy works well, but only if those investments pay off. Which they never do forever, and BlockFi took risks that were much higher than a normal bank.
So BlockFi was hit hard. First, it got into trouble by having invested in Luna, the stable token that famously crashed over night. And then, as crypto winter unfolded, FTX and Sam Bankman-Fried bailed them out. But instead of giving them actual money, they gave BlockFi their FTT token... which, as we all know by now, recently collapsed when FTX went down.
In the end, BlockFi ended up owning everyone money, with no way to pay it back, and had to file for bankruptcy. The saddest part for sure: That consumer probably thought that their money was safe.
Now you see why we call it the FTX Domino Effect. We sincerely hope you are not affected by the latest domino falling, and maybe this podcast is giving you a reason to evaluate all the places you have your money parked. There will be more dominos to fall.
This podcast is produced by Cryptohunt.it, the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, design is done by Carmen Rincon, and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.