What the hell has happened to FTX?

CZ has denied that he deliberately caused a liquidity crisis at FTX – “I spend my energy building up, not fighting,” he said. tweeted On November 7, but Tim Mangnall, whose company Capital Block has consulted for both Binance and FTX, says that this was a “cunning” business maneuver of CZ, one that enabled him to buy one of his biggest competitors for money on the dollar. ”

Greetings CZ, King of Cryptography

If it continues, the deal will further strengthen the position of Binance as the world’s largest cryptocurrency exchange. It was already larger, in terms of trade volume, than a linking to his closest competitors (Coinbase, Kraken, OKX, Bitfinex, Huobi and FTX) together.

Not only will the deal reduce the size of the pole of fairs, but Binance will also keep more control over the types of coins that are offered on a large scale for purchase. Similarly, the influence of CZ, already one of the most prominent figures in the crypto world, will also be increased in debates on policy and regulations.

For the part of the community that believes that Crypto should stand for decentralization, the merger of two of the world’s largest fairs will also be concerned. With decentralization, everything is about the even distribution of power and eliminating single points of failure, but the acquisition by FTX does not support any of the two ambitions.

However, the alternative was to let FTX collapse, which would have shaked the cryptom markets to the same extent as The fall of Terra-Luna and Celsius. “If FTX went bankrupt, it would have had catastrophic consequences,” says Mangnall. Despite the rescue deal, the prices of Bitcoin and Ether have fallen by more than 10 percent, so that more than $ 60 billion of the market has been wiped out.

The implosion of FTX will also raise questions about what needs to be done to protect crypto owners in the future. A proposal, submitted by CZ, is that all stock exchanges must offer a transparent ‘proof of reserves’, in other words, clearly demonstrating that they have sufficient cash at hand to finance recording of customers. In a tweetHe promised that Binance will “take up” this policy soon.

Brian Armstrong, CEO of Coinbase, expressed his sympathy for FTX, but also: pointed at “Risky business practices” and “conflicts of interest” that exposed the company – something that, probably, would also remedy transparency requirements. Armstrong separated the worries that Coinbase could come into a similar liquidity crisis: “We keep all assets dollars for dollars,” he wrote on Twitter.

But others say that this last dance with disaster is proof that people should not store their wealth with exchanges, point out. “What we see now is a reminder of the importance of crypto storage,” says Pascal Gauthier, CEO at Ledger, which makes portfolios with which people can manage their own crypto. “You are not the owner of your crypto unless you use self -preservation.”

Whatever the consequences are, the acquisition marks the end of a long and legendary rivalry between Binance and FTX – and hopefully a catastrophe will be averted.

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