Many of our customers, and peers in the fintech industry, have been rocked by the sad and unfortunate news that FTX has reached the brink of insolvency this week (8th November 2022), and as a result, shockwaves have been sent through the industry.
We want to confirm to our customers and partners that Orbital has no exposure to FTX, or to their FTT token. We expect no direct impact to the functioning of our products and services, or to our partner/vendor network.
What happened to FTX?
FTX was considered one of the safest and most credible exchanges in the industry, and until recently has been lobbying heavily to lawmakers in Washington for crypto-friendly regulations to be put in place. A series of unfortunate events were triggered last week, when a leaked document surfaced, which showed FTX’s CEO Sam Bankman-Fried’s crypto hedge fund, Alameda Research, had peculiarities on their balance sheet causing concerns for insolvency. The report also suggested that FTX and Alameda, which were nominally separate businesses, were in fact more closely related than previously thought.
The timeline of events then gets more complicated as Binance’s CEO, Changpeng Zhao, who had previously invested in FTX, became entangled in events, announcing Binance would sell its entire stake of FTT tokens, triggering FTTs value to plummet. This caused a domino effect, leading to traders on the FTX platform pulling out more than $6 billion from the exchange over a three-day period, leaving the firm insolvent and unable to meet client liabilities. Since the collapse, Binance has withdrawn its offer for potential acquisition of FTX.
What does this mean for the rest of the crypto market?
This event is considered a black swan in the crypto space, however it’s expected that there may be further contagion and indirect impact on other industry players, and to the markets in general. Despite market volatility, our business remains removed from the tremors of this event, as unlike other firms Orbital does not leverage or put customer’s assets to work. We hold our customer assets 100% in full reserve under our own custody as a licensed institution. Customers can withdraw or convert their assets to fiat currencies with T+0 settlement as normal.
Our stablecoin focus remains the same
We continue to believe strongly in the benefits of adopting cryptocurrencies for corporate financial operations and payments in general. The two largest stablecoins by market capitalization and by usage, USDT and USDC, are especially popular for payments with continued growth being seen in emerging markets despite the events which have troubled the industry throughout 2022. Both coins are pegged 1-to-1 with a matching fiat currency (US dollars) and are fully collateralized by reserves.
If you have any further questions about the collapse of FTX or about the assets you hold with Orbital, please get in touch with your relationship manager using your typical communication channel.
