Tech

What the hell happened to FTX?


Cz denied that he deliberately created a liquidity crisis at FTX – “I spend my energy to build, not fight,” he tweeted On November 7 – but Tim Mangnall, who has Capital Block, advised both Binance and FTX, saying that this is a “wise” business of CZ, allowing him to “buy one of the opposites. its biggest competitors at dollar-denominated prices. “

All Hail CZ, Crypto King

If it is conducted, this agreement will strengthen Binance’s position as the largest cryptocurrency exchange in the world. According to trading volume, it was greater than a series of nearest competitors (Coinbase, Kraken, Okx, Bitfinex, Huobi and FTX) combined.

This agreement not only reduces the size of the active exchange group, but Binance will also take more control over widely listed currencies to buy. At the same time, the influence of CZ, which has been one of the most prominent characters in the cryptocurrency world, will also be magnified in the debate surrounding policies and regulations.

For the part of the community that believes cryptocurrencies should represent decentralization, the merger of two of the world’s largest exchanges would also be cause for concern. Decentralization is all about distributing power evenly and eliminating single points of failure, but the FTX takeover doesn’t back the ambition.

However, the alternative is to allow FTX to collapse, which will vibrate the cryptocurrency markets at the same level as The Fall of Terra-Luna and Poison. “If FTX defaults, it will have dire consequences,” Mangnall said. Despite the rescue deal, bitcoin and ether prices fell more than 10%, wiping more than $60 billion off the market.

The explosion of FTX will also raise questions about what should be done to protect crypto holders in the future. One proposal made by CZ is that all exchanges must provide transparent “proof of reserves” — in other words, clearly demonstrate that they have enough cash to fund withdrawing customers. In one tweethe promised that Binance will soon adopt this policy.

Brian Armstrong, Coinbase CEO, sympathizes with FTX but also point at “Risk business activities” and “conflict of interest” causing the company to be revealed – something that perhaps, the requirements of transparency will also be overcome. Particularly, Armstrong has dismissed concerns that Coinbase may encounter similar liquidity recession: “We hold all assets in dollars,” he wrote on Twitter.

But others say this latest dance to disaster is proof that people shouldn’t hoard their fortunes with exchanges, full stop. Pascal Gauthier, CEO at Ledger, said, “What we are seeing now is a reminder of the importance of crypto custody,” said Pascal Gauthier, CEO at Ledger, wallet manufacturing company that allows people to manage their own cryptocurrency. “You don’t own your cryptocurrency unless you use self-regulatory authority.”

Regardless of the consequences, this acquisition marks the end of the long -term and long -term competition between Binance and FTX – and hope, a disaster that has been prevented.

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