BlockByBlock | $90 Million Raised Despite FTX Blow Up
Local Developments
Movements In The GCC 👇
MENA startups raised $646 million in October 2022, a 331 per cent year-on-year (YoY) growth against $150 million raised in October 2021.
CoinMENA, a fast-growing MENA-based crypto exchange, partners with Carlton Real Estate to enable property purchases with crypto assets.
Zodia Markets, a crypto exchange led by England's Standard Chartered Bank, discloses it will be opening up a headquarters in Abu Dhabi in 2023.
MasterCard selects seven UAE-based blockchain startups in its Startup Path program, an initiative aimed to accelerate Web3 projects across the globe.
"As adoption continues to grow in the region, we see significant opportunities to use cryptocurrencies to purchase real-world assets. Crucially, this partnership also signals to the market that cryptocurrencies are maturing and gaining mainstream acceptance as a viable medium of exchange," said CoinMENA Founders Talal Tabbaa and Dina Sam’an.
Key Industry Development
Explain Like I'm Five: The FTX Collapse 👶
FTX's collapse is one of the most significant developments in crypto in recent months. The exchange, which held a top 5 spot for trading volume before its collapse, had been one of the most trusted platforms in the crypto world before it went belly-up in the span of about a week.
In the traditional financial world, this would be like one of the top banks just suddenly went out of business, leaving thousands of customers without any ability to recuperate their deposited money.
In the simplest terms, here's what went down:
CoinDesk released this article, which showed that FTX's sister company, Almaeda, had $14.6 billion worth of assets. Not much of a problem there. Except of those $14.6 billion in assets, $3.66 billion were in the form of $FTT token, which is FTX's native token. In effect, Sam Bankman-Fried, FTX's CEO, was using the token of one of his companies as an asset for his other company. When crypto community members read about this, they raised red flags.
As a response to the article, Binance CEO Changpeng Zhao declares publicly that he is selling his stake in the FTX token. While Zhao initially says he will execute the sale in a way that 'minimizes market impact,' on the FTX token, he later sells $530 million of FTT in one day.
As most of Almaeda's assets are based on the value of FTT, this sudden drop in price puts the company at extreme financial risk. Due to the strong ties between Almaeda and FTX revealed in the CoinDesk article, FTX holders view this sudden drop as a significant threat to the health of the exchange. Panic selling begins.
Binance declares that it will buy FTX, saving it from its liquidity issues, but then reconsiders the deal after checking FTX's financials. With most of its assets held in the FTX token, and the FTX token beaten down to a pulp, Binance considers the purchase too much of a risk.
FTX is left without the means to repay the deposits customers had made through the platform. Their CEO, Sam Bankman-Fried (SBF), files for bankruptcy and publicly discloses the following message on Twitter:
"I'm sorry. That's the biggest thing. I f*cked up, and should have done better."
This is the streamlined account of the events. Twitter is packed with stories of FTX that show the mysterious 'missed signs' that the exchange was headed toward disaster.
A video of Almaeda's CEO Caroline Ellison saying: "We tend not to have things like stop losses. We don't think those are necessarily good risk management tools," stands out as one glaring warning sign that the world just failed to acknowledge at the time.
The FTX story remains littered with gray areas. For one, the world still does not know the exact relationship between FTX and Almaeda. As CoinDesk reports, legal filings could force FTX to disclose the knowledge that would clarify this relationship.
One thing is for sure: Millions have lost their crypto because of high-scale negligence that happened right before our eyes. In the long-term, this could be the wake-up call that is needed to usher crypto in the right direction.
I'm sure, however, FTX customers would not share this sentiment.
Startup Action
Updates From The Startup Ecosystem 💸
Pyppl, a blockchain payment solution platform based in the UAE, raises $20 million in a Series B funding round.
Ramp Network, an accelerator of Web3 solutions, raises $70 million in a series B funding round led by UAE-based Mubadala Capital and Korelya Capital.
Startup Spotlight 💡
BlockbyBlock covered Pyppl - pronounced "people" - in April 2022 when it captured $11 million from an oversubscribed funding round in the UAE.
A string of awards had made the blockchain-Fintech startup a popular candidate among investors. The company was awarded the prestigious “2021 Global Visionary” award by Ripple in 2021 and became the first-ever company in the Middle East to deploy a “Blockchain On-Demand Liquidity” solution with Ripple.
In April 2022, the company was ranked the fourth best crypto startup globally by TechRound. Obviously, sentiment around Pyppl's scalability and growth prospects continue to hold steady even amidst Bitcoin's breakdown and FTX's collapse.
This recent funding round brings Pyppl total raised funds to $40 million.
Pyppl is currently operational in Abu Dhabi and Bahrain and has been granted authorization to begin operations in Kenya, Mozambique and Kazakhstan. The company plans to continue advancing into the Arab and Middle Eastern regions through Nigeria, Sierra Leone, Egypt, Saudi Arabia, Tanzania, South Africa, Qatar, Jordan, Oman, Kuwait and many others.
Click here to learn more about blockchain-powered Pyppl.
Blockchain Trends
Global Trends 📉
Investors withdraw up to $3 billion in Bitcoin, the largest rate since April 2021.
FTX's collapse triggers a "proof of reserves" movement, which would give the public assurances that exchanges have the assets to cover their liabilities.
FTX suffers a $600M+ hack after it files for bankruptcy, and an FTX Support Chart moderate declares all FTX applications as 'malware.'
Local Trends 📈
The UAE claims $460 million of the $646 million raised by startups in the MENA region, most of which has gone to startups in the CleanTech and FinTech sectors.
The Middle East, Africa & Asia Crypto & Blockchain Association (MEAACBA) launches in Abu Dhabi with an aim to develop an accessible, transparent, and compliant crypto-blockchain ecosystem.
Upcoming Events
AgoraGroup 🔴
The Global Blockchain Congress is undergoing its 10th iteration in Dubai on November 23rd and 24th of 2022.
Events Across The UAE 🔵
The World Blockchain Summit will be hosted on Oct. 17th and 19th of 2022 in Dubai, UAE.
The Blockchain Life Event will be hosted on November 28th and 29th of 2022, in Dubai, UAE.
The International Crypto Summit will be hosted from November 14th till November 16th, 2022, in Dubai, UAE.