Source: Sergei Elagin / Shutterstock
Source: Sergei Elagin / Shutterstock
Once again, the crypto market is finding itself under the scrutinizing lens of the whole world. Another market rout is taking hundreds of billions of dollars from the industry. Of course, at the center of all this revamped controversy is FTX. The company made headlines last week when it went from crypto powerhouse to bankrupt in a matter of days. The reach of FTX is unmatched, and the company had its hands almost everywhere. One place the company was using its influence was in Ukraine crypto donations. As the war in the Eastern European country wages on, the meltdown of FTX shows just how far the company’s influence has rippled.
Indeed, FTX’s collapse has been able to bring the whole market down with it. Now, Bitcoin (BTC-USD) prices are under $17,000 for the first time since late 2020 and the global crypto market capitalization has plunged to $845 billion. Crypto exchange outflows are also now at all-time highs as investor trust in exchange custody reaches perhaps its all-time low, with billions of dollars in Bitcoin and Ethereum (ETH-USD) being taken off of exchanges.
The Sam Bankman-Fried-led empire was one of the top five largest crypto exchanges. And, just months before the company’s implosion, it was rapidly expanding. While the Terra (LUNA-USD) collapse affected most of the market, FTX was pushing acquisitions and bailouts very aggressively. Contrary to what we now know was going on behind the scenes for the company, FTX seemed to be completely shrugging off the market volatility.
But even more impressively, the company has been pushing crypto into the mainstream in a way never done before. Now, as Bankman-Fried steps down and his company declares bankruptcy, investors are reflecting on the wide impact FTX has had.
Ukraine Crypto Donations Highlight FTX’s Far Reach Before Bankruptcy
FTX was building its business in terms of assets; that much is obvious. However, the company has also been pushing crypto into the mainstream in a way other companies have not. As FTX now moves into its bankruptcy proceedings, investors highlight things like the company’s Ukraine crypto donations to show just how many people are affected by the collapse.
Indeed, Sam Bankman-Fried has been doing well to get the FTX brand in peoples’ mouths. In 2021, the company struck up a deal with the Miami Heat for $135 million to rebrand the team’s home stadium to FTX Arena. Earlier this year, FTX’s Super Bowl ad starring Larry David was one of the most talked about.
But beyond advertising its own name, the company has been generating lots of positivity among Ukraine supporters. In March, FTX partnered with the Ukrainian government on a donations website. Through it, investors could donate crypto to the Ukrainian central bank. The crypto could then be converted to fiat to fund the country’s defense against the Russian invasion. The partnership helped the country to raise millions in funding and had proven a use case for the industry in seamlessly funding humanitarian efforts and quickly responding to disaster.
Of course, all of this publicity-building is certainly coming back to bite the company nowadays. Larry David’s skepticism in the Super Bowl ad is easy meme fodder, and Twitter has been quick with FTX Arena quips.
More sinisterly, the Ukraine donations partnership is under scrutiny as well. Twitter is calling attention once again toward the company’s relationship with Ukraine. It seems the news from early in the year is lending well to plenty of conspiracy theories. Political commentators and media figureheads have been discussing a stream of claims tying this relationship to alleged money-laundering.
The claims rely on an unsubstantiated claim that the Ukrainian government has invested directly into FTX. An employee of Everstake, a company that assisted the construction of the donation partnership, points out that the donation website keeps a transparent report on how the donations have funded the war effort. They also rely on the fact that Bankman-Fried donated to Democratic campaigns. However, they do not acknowledge his donations to Republican campaigns as well.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.