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Worse than FTX! “Nobody is ready for the biggest hack of all time” – what’s behind it?

Crypto News Worse than FTX! “Nobody is ready for the biggest hack of all time” – what’s behind it?

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Are the crypto markets facing a new meltdown – worse than the one at FTX? A popular crypto analyst is warning of this. What is behind it?

What’s happening in crypto today?

The crypto industry has been through a lot in the last three years: company bankruptcies, hacks, rug pulls – investors are complaining about billions in losses, and many companies are heavily indebted as a result.

One of the most significant events was the collapse of FTX, one of the largest crypto exchanges in the world – and the downfall of its founder Sam Bankman-Fried. The crash resulted in a loss of more than nine billion US dollars in November 2022 and dragged numerous industry participants and cryptocurrencies down with it.

Analysts agree: There is hardly an event that has had more serious consequences than the FTX fiasco. According to forecasts, Bitcoin would currently be trading at more than $150,000 – had FTX not existed.

To this day, the industry has not fully recovered from the stock market's collapse. Its founder, Sam Bankman-Fried (SBF), is in prison and was sentenced to 25 years in prison. The judge was convinced that SBF had embezzled eight billion dollars in customer funds. The sentence is considered lenient: the public prosecutor had originally demanded up to 50 years in prison, while court experts had even considered a sentence of more than 100 years in prison possible.

A crash worse than FTX?

In short: The FTX debacle was a regular “black swan” event – and now the next crash is already looming, as “Timechainindex.com founder and crypto analyst Sani adds.”

Can Bitcoin really handle a “second FTX”? Image: Coinmarketcap.com

He uses a graphic to show how many Bitcoins Coinbase, the largest American crypto exchange, actually owns. It becomes clear that Coinbase manages almost all Bitcoins in the entire crypto industry! Whether it's the Bitcoin ETFs from BlackRock or Grayscle, Tesla, Space X, MicroStrategy or one or another mining company: Coinbase holds almost all Bitcoins in the industry – no trace of decentralization!

An overview:

  • Coinbase itself holds 1,060,397 BTC
  • Coinbase holds 357,043 BTC for BlackRock's IBIT
  • Coinbase holds 225,607 BTC for Grayscale's GBTC
  • Coinbase holds 79,296 BTC for MicroStrategy

In summary, Coinbase has more than one million BTC (1,105,318 BTC) for exchanges alone, 808,619 BTC for ETFs/ETPs – and the rest of more than 350,000 BTC is distributed among custodians, funds and OTC desks, companies and miners.

The problem here is that if someone actually succeeds in hacking Coinbase, the industry will be faced with a worst-case scenario – the worst possible accident. Suddenly, not only would all of the Bitcoins belonging to mega Bitcoin collector MicroStrategy be gone – but also all of the exchange Bitcoins belonging to Coinbase, other crypto exchanges and the Bitcoin ETFs!

Is crypto a good investment?

This is what the analyst is alluding to when he speaks of the “biggest hack in the history” of cryptocurrencies – and of the fact that nobody, absolutely nobody, is prepared for it. Bitcoin (BTC) as we know it would probably be a thing of the past, as Bitcoin expert Francis Pouliot commented in a Bitcoin forecast. In his opinion, a “new Bitcoin” would then quickly be launched:

“In a Coinbase disaster scenario (stolen or lost coins), we could see a massive consortium of powerful interests clamoring for a Bitcoin fork to somehow 'recover' their loss. This would effectively create an altcoin that they would claim was 'the real Bitcoin.'”

After all, Pouliot is convinced that Bitcoin will emerge even from such a worst-case scenario. His argument: There have always been “new Bitcoins” in the past, such as Bitcoin Cash (BCH) or Bitcoin SV (BSV). But, according to his forecast:

“Ultimately, the market will inevitably favor the coin whose blockchain has not been ‘reset.’”

However, just like with the forks of 2017, Bitcoin will emerge “strengthened” from the possible worst-case scenario and will become even more valuable as a result. Pouliots optimises conclusion:

“And no one will ever try such a stupid stunt again.” Until next time. The tree of decentralization needs to be refreshed from time to time with the blood of forkers and noderunners.”

Pouliot sounds confident that BTC can handle such a brutal systemic risk. One can only hope that Bitcoin never really has to prove its resilience in this regard. If you want to accumulate in advance: buying Bitcoin with a bank transfer is a safe, practical option.

Last updated on September 9, 2024

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