The second largest crypto exchange in the world that some in the ecosystem considered too big to fail collapsed spectacularly this week, declare bankruptcy on Friday morning and announcing the resignation of its founder and CEO Sam Bankman-Fried, also known as SBF.

It’s the end of what has been a disastrous week for the company that was once valued at $32 billionand was one of the most influential players in the world of cryptocurrencies.

The collapse of FTX has some striking similarities until the demise of the giant investment bank Lehman Brothers in 2008, yet another institution that was deemed too big to fail, until it did and led to a broader financial crisis and economic downturn.

Whether the FTX implosion is destined to cause the same destruction as Lehman’s is up for debate, but it will certainly create major consequences.

“With FTX going down, we will see cascading effects,” Changpeng Zhao, also known as CZ, founder of Binance, the world’s largest crypto exchange, warned on Friday. “Especially for those close to the FTX ecosystem, they will be negatively affected.”

Speaking at the annual Indonesia Fintech Summit In Bali, CZ said the destruction of FTX could create ripple effects across the crypto world comparable to the 2008 global financial crisis, which he called “probably an accurate analogy.”

A ‘very big player falling’

CZ said that the FTX crisis presents an unprecedented challenge for the cryptocurrency industry, despite its role in the events of the past week.

After a Twitter online dispute in which CZ accused SBF of allegedly badmouthing him to regulators, Binance CEO Announced on Sunday, the company would dump all of its holdings of FTT, a token used by FTX clients. Binance downloaded about $500 million in FTTcausing a sell-off among FTX users and subsequently causing FTX to lose all its liquidity.

Binance, FTX’s main competitor, I was to earn more from the collapse of rival exchange by picking up the pieces and establishing itself as the world’s largest digital asset platform. CZ stepped in with an offer to buy the exchange with a letter of intent, but quickly retracted after Binance said it had completed its due diligence process.

the Wall Street Journal reported this week that SBF had authorized the use of billions of dollars in client assets to finance the investment activities of Alameda Research, a trading firm and sister company of FTX also founded by SBF. On Thursday, the publicly apologized in Twitter and took responsibility for the situation.

“Sorry. That’s the biggest thing. I screwed up, and I should have done better,” he wrote on Twitter. mail

FTX’s collapse comes on the heels of a longer Crypto Winter that has seen values ​​plunge this year, as well as increased regulatory scrutiny and the implosion of various other components of the crypto ecosystem, including the stablecoin. TerraUSD and its sister token Lunaas well as crypto lenders digital traveler Y Celsius.

“We just saw another very important player go down,” CZ said of the FTX crash on Friday, noting that the sheer size of FTX makes this far more important than other companies that went under during the crypto winter.

“A lot of consumer confidence is affected, and I think we’re basically back a few years,” he said.

The scale of FTX’s failure has drawn attention in Washington, as years of indecision It means that until now officials have been unable to establish clear legal frameworks for the crypto industry. is also the last setback for Securities and Exchange Commission Chairman Gary Gensler, whose critics of the agency say he failed to warn investors about the many crashes in the cryptocurrency world that have occurred this year.

“Now, the regulators will legitimately scrutinize this industry much, much more, which is probably a good thing, to be honest,” CZ said, though the billionaire was optimistic about the chances of cryptocurrency rebounding from its latest mishap.

“The market will heal itself,” he said. “We are in a new industry and there are many risks. We need to learn how to deal with this and how to build a much healthier industry.”

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