The contagion continues as FTX is a virus that’s soaring worldwide 🦠; Square + American Express, or a perfect ecosystem match 💳; Wait, Crypto is Dead? 🤔

FinTech is Eating the World, 18 November

Hey Everyone,

TGIF! Wow, what a week it was… 😳 And we’re ending it with a strong note as today’s issue is both hot and super important on micro & macro levels. We’re looking at the continuing contagion as the FTX virus spreads (& it’s deadly!), Square + American Express, or a perfect ecosystem match (if you’re a FinTech focused on SMEs, you gotta steal this!), and question whether crypto is dead now. Let’s jump straight into the fascinating stuff:

The contagion continues as FTX is a virus that’s soaring worldwide 🦠

The news 🗞 The story of FTX is fascinating not only because in only 3 years Sam Bankman-Fried & the Team has managed to commit one of the biggest frauds of all time. It’s also fascinating because every day we uncover something new.

This time, Temasek and Gemini join the spreading contagion.

More on this 👉 Singapore-based investor Temasek Holdings has decided to write off its $275M investment in FTX following its bankruptcy filing. The state-owned investor put in $65M for about 1.5% in FTX US and $210M for around a 1% stake in FTX International.

The worst part? Everything seemed to be fine 😬. From their commentary:

Similar to all investments, we conducted an extensive due diligence process on FTX, which took approximately 8 months from February to October 2021. During this time, we reviewed FTX’s audited financial statement, which showed it to be profitable.

This serves as another reminder that there’s no such thing as Smart Money.

Speaking about Gemini, a crypto exchange and custodian founded by the Winklevoss brothers, it’s also feeling a lot of pain. The exchange has suffered a rush of withdrawals following FTX-Alameda bankruptcy, CoinDesk reported.

Gemini reportedly saw $485M in net outflows in the past 24 hours, the largest among crypto exchanges, as per Data by blockchain intelligence platform. Outflows totaled $563M and were offset by only $78M in inflows.

Looking at the big picture, we must note that in the past 7 days alone, Gemini experienced a total of $682M in net outflows. That’s quite a bit 😳

Why is this important? 🤔 At the core, this yet again shows a real systemic risk stemming from FTX given how widespread FTX’s tentacles were (and still are).

Here’s more on that, plus a brief look at the new white knight emerging & the takeaway (+2 bonus reads):