In response, CZ drop a bomb on Twitter: Binance will sell all FTT holdings. He stated his intention was to sell “in a way that minimizes the impact on the market”, but this announcement resulted in a massive drop in the price of FTT (the token has lost almost 90% of its value) and withdrawals at FTX. skyrocketed as customers began to panic about the safety of their cryptocurrencies.
Bankman-Fried initially denied the default rumors on November 7, claiming that “a competitor is trying to pursue us with false rumors” and that “FTX is fine.” (This tweet has since been deleted.) Then it became clear that the company was trying to secure a bailout.
CZ denied that he intentionally created a liquidity crunch at FTX— “I spend my energy building, not fighting,” he said. tweeted 7 — but Tim Mangnall, whose firm Capital Block has advised both Binance and FTX, says it was a “smart” business move by CZ that allowed him to “buy one of the its biggest competitors at dollar-denominated prices. “
All Hail CZ, Crypto King
Binance has now rejected that deal. The crisis at FTX could strengthen its rival’s position as the world’s largest cryptocurrency exchange. By trading volume, Binance is already bigger than a bunch of its closest competitors (Coinbase, Kraken, OKX, Bitfinex, Huobi, and FTX) combined.
Binance will now likely take more control over publicly listed coins for purchase. At the same time, the influence of CZ, already one of the most prominent figures in the crypto world, will also be magnified in the debates around policy and regulation.
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 demise of FTX doesn’t favor the ambition.
After the Binance rescue plan was first announced, bitcoin and ether prices fell more than 10%, wiping more than $60 billion off the market. Now they can be reduced even further.
The collapse of FTX will also raise questions about what should be done to protect crypto holders in the future. One recommendation from CZ is that all exchanges should 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, CEO of Coinbase, expresses sympathy for FTX but also point at “Risk business practices” and “conflicts of interest” expose the company – which presumably, the transparency requirements will also be overcome. Separately, Armstrong brushed off concerns that Coinbase could experience a similar liquidity crunch: “We hold all of our 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. 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.”
Update 11-9-22, 5:30 p.m. EST: This article has been updated to reflect Binance’s statement that it will not buy back FTX after all.
