FTX experienced a great downfall, but why it is said as Crypto’s Lehman Moment ? FTX downfall in market & Crypto’s Lehman Moment

FTX’s collapse is big news to both crypto investors and non-investors. As FTX is considered a lawful firm, where they follow all the compliance and stays stable even in huge market fluctuations. But this unexpected collapse of the firm is considered as the Lehman moment of the Crypto Industry.

FTX  & the Lehman Reference –

The crypto industry is a volatile industry, it provides huge profits but with the risk involved of the same frequency and possibility. But the downfall of FTX was even a shock even by crypto standards.

The recent event is been linked to the Lehman Brothers, whose decisions led to catastrophic effects on the market as a whole. The losses were no longer limited to just one industry or market but to a complete ecosystem.

The current market scenario –

As we know Binance and FTX are two of the biggest Crypto asset Exchange platform in the Crypto industry. And Binance was earlier coming into the deal to completely buy out FTX, moments before walking out of the deal. As Binance CEO  Changpeng Zhao stated FTX’s “issues are beyond our control or ability to help.”

Also in another Tweet CZ, “We won’t support people who lobby against other industry players behind their backs,” in support of his decision to back out from the FTX buying-out deal.

Market Reputation and working of FTX, before the collapse –

FTX was also regarded as one of Crypto’s “blue chip” companies, it was a stable, well-capitalized business that survived even with huge market fluctuations and a bearish market. Its working was stable and regarded by investors as a responsible, grown-up firm that didn’t engage in risky, speculative trading or gamble with customers’ funds.

Outcomes of the collapse –

The sudden collapse of FTX raised a lot of questions about Crypto’s future. also the investors and customers of FTX the most. As FTX was considered a reputed and well-functioning industry, the catastrophe escalated at the highest speed possible. Almost no one saw it coming outside the FTX,  and the investor money is in question, as it seems FTX  may file for bankruptcy if the situation is not handled seriously.

This is a major reason that this is been inked and FTX’s collapse set off a broader market failure, as the collapse of Lehman Brothers did in 2008.