FTX Turmoil Undermines Miami’s Crypto Strategy – Commercial Observer

In a twist that illustrates the risks underlying Miami’s bid to fashion itself as a center for the crypto economy, the values ​​of cryptocurrencies are plummeting, and one of Miami’s most prominent crypto names is on the brink of collapse.

Cryptocurrency exchange FTX this week was caught in a liquidity crisis that rocked the crypto markets. The global company, headquartered in the Bahamas, said it had entered into an agreement to be acquired by Binance, a competitor. Then FTX said the deal was off.

“What does this mean going forward? I’m not sure – it depends on what happens over the next week,” FTX co-founder and CEO Sam Bankman-Fried wrote Thursday morning on his Twitter account.

In September, FTX said it would move its US headquarters to Miami from Chicago. Miami’s mayor Francis Suarez hailed FTX’s move at the time, tweeting: “Very honored to have your new US HQ move to MIA. FTX is one of the most innovative companies on the planet.”

Earlier this year, FTX paid $135 million for the naming rights to the waterfront arena there NBA‘s Miami Heat play. The Heat did not respond to requests for comment, but it’s not the first time a South Florida sports venue has been named after a financially troubled company. At the beginning of the 2000s, Miami Dolphins‘ Home was known as Pro Player Stadium even though the clothing brand’s parent was bankrupt.

Bankman-Fried wrote on Thursday that FTX’s US operations were unaffected by the problems.

But a Miami blockchain entrepreneur compared the meltdown to the dot-com bust two decades ago.

“These days are brutal for the crypto industry,” Natalia Karayanevathe Miami-based CEO of the real estate blockchain firm Propy, told the Commercial Observer. “Now the good actors, the builders among us, must pay for and cope with the mistakes of the irresponsible. This season doesn’t feel like another crypto winter, more like a Web3 dot-com bust.”

In 2021, when cryptocurrency values ​​rose to record highs, Suarez made a characteristically ambitious statement. He unveiled Miami coin, the city’s custom digital currency, and proclaimed Miami the “bitcoin capital of the world.” Suarez has even taken some of his salary in cryptocurrency.

It wasn’t just the mayor who felt the speed. A number of crypto companies, incl XBTO Group, Blockchain.com and Ripple, has opened offices in Miami in the past two years. Silicon Valley venture capital firm a16z also established a Miami office.

The Miami Beach Convention Center organizes the annual Bitcoin Conference. And Major League Soccer‘s Inter Miami playing in pink jerseys with the name of the crypto exchange XBTO.

“Miami certainly took a risk, but it’s hard to say it was too much given the limited size of crypto games in Miami’s economy,” Lee Reinersa crypto expert who teaches at Duke University Law School, told the Commercial Observer. “I think the bigger issue is that Miami’s approval of crypto gave a veneer of legitimacy that wasn’t deserved.”

Miami jumped in at the top of the crypto bull market. But cryptocurrency values ​​have plummeted over time Federal Reserve has moved aggressively to raise interest rates. Bitcoin is down 73 percent in the past year, and ethereum is down 72 percent.

“Miami helped facilitate significant investor losses over the past year,” Reiners said, “and the City Council should apologize for this.”

But John Boyd Jr., a site selection consultant and principal at The Boyd Co.took a more optimistic view of the region’s approach.

“Miami has gained a lot from its association with crypto and stands to lose little from the current collapse of the industry,” Boyd told the Commercial Observer. “Miami’s connection with crypto has helped change how companies and investors view the Miami market, from just a tourism and hospitality enclave to a new and emerging global tech haven.”

Propy founder Karayaneva is similarly optimistic about Miami’s long-term prospects.

“Silicon Valley is only for geeks. LA is only for creatives and artists,” she said. “Miami allows both worlds to come together and build the future. It will be the next Silicon Valley of Web3.”

Jeff Ostrowski can be reached at [email protected].