As Sam Bankman-Fried's FTX files for bankruptcy, the overallcryptocurrencies market faces risks, according to Joseph Ayoub.
He told CNBC on Friday that there was a serious risk of broader contagion to the ecosystems itself. The size of thecryptocurrencies is only around $830 billion compared to the $43 trillion US equity market.
Companies in the sector will face renewed skepticism and trust in the wake of FTX's collapse, but it also means other firms can move to capture more market share now that one of the biggest players has gone under.
On Tuesday, Binance agreed to a tentative agreement to bail out FTX, but the next day it backed away from the deal. FTX filed for Chapter 11 after failing to find other investors. Bankman- Fried resigned as CEO.
The extent of FTX's troubles on the rest of thecryptocurrencies sector is not yet known.
It's not clear how far and how deep this goes within Cryptocurrencies. It could take a long time for this to be resolved due to the amount of companies involved and the amount of investments involved.
The FTX crash is different from the 2008 financial crisis in that it does not have a clear backstop.
There is no central bank for the digital currency.
It's ironic that we thought Sam Bankman-Fried and FTX were giving a lender of last resort optionality.
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