In response, CZ . has dropped a bomb on Twitter: Binance would sell its entire FTT holding. He claimed the intent was to sell “in a way that minimizes market impact,” but the announcement led to a sharp drop in FTT’s price (the token has lost nearly 90 percent of its value) and an increase in withdrawals. at FTX as customers began to panic about the security of their crypto.
Bankman-Fried initially denied rumors of insolvency on Nov. 7, claiming that “a competitor is trying to chase us with false rumours” and that “FTX is okay”. (This one tweets have since been removed.) It later became apparent that the company was struggling to secure a bailout.
CZ has denied that he intentionally caused a liquidity crisis at FTX: “I spend my energy building, not fighting,” he said. tweeted on Nov. 7, but Tim Mangnall, whose firm has consulted Capital Block for both Binance and FTX, says this was a “devious” business maneuver by CZ, one that allowed him to “buy one of its biggest competitors for pennies on the dollar.”
Greetings CZ king of cryptography
Binance has now rejected that deal. The crisis at FTX is likely to bolster its rival’s position as the world’s largest cryptocurrency exchange. Binance is already bigger, in terms of trading volume, than a pairing of its closest competitors (Coinbase, Kraken, OKX, Bitfinex, Huobi and FTX) put together.
Binance will now likely have more control over the types of coins widely offered for purchase. Likewise, the influence of CZ, already one of the most prominent figures in the crypto world, will also be increased in policy and regulatory debates.
For the part of the community that believes that crypto should represent decentralization, the merging of two of the world’s largest exchanges will also be of concern. Decentralization is all about equalizing power and eliminating single points of failure, but the fall of FTX does not support either ambition.
After Binance’s bailout was first announced, bitcoin and ether prices fell more than 10 percent, wiping more than $60 billion from the market. They can now descend further.
The implosion of FTX will also raise questions about what needs to be done to protect crypto owners in the future. A CZ proposal is that all exchanges must provide transparent ‘proof of reserves’, in other words, clearly demonstrate that they have enough cash on hand to fund customer withdrawals. In a tweethe promised that Binance will incorporate this policy “soon”.
Coinbase CEO Brian Armstrong expressed his sympathy for FTX, but also pointed at “risky business practices” and “conflicts of interest” that exposed the company – something that, presumably, transparency requirements would also remedy. Separately, Armstrong allayed concerns that Coinbase could face a similar liquidity crisis: “We keep all assets dollar for dollar,” he wrote on Twitter.
But others say that this latest dance of calamity is proof that people should not store their wealth with barter. “What we are seeing now is a reminder of the importance of crypto safekeeping,” said Pascal Gauthier, CEO at Ledger, which creates wallets that allow people to manage their own crypto. “You don’t own your crypto unless you use self-preservation.”
Updated 9/11/2022, 5:30 PM EST: This article has been updated to reflect Binance’s statement that it would not acquire FTX after all.
