The clash between the two giants Binance and FTX shook the crypto market
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ftx vs binance
FTX and its affiliated trading company Alameda Research began facing scrutiny after a CoinDesk article alleged that the FTT token was Alameda’s largest asset on its balance sheet at $14.6 billion as of June 30. Both companies are backed by 30-year-old now ex-billionaire and second-largest individual donor to the US Democratic Party in the 2021-2022 election cycle, Sam Bankman-Fried (SBF), who has recently been advocating for stricter DeFi regulations.
According to CoinGecko, the FTT token is issued by the FTX exchange, which had about $8.5 billion in daily trading volume before the explosion. FTT’s value was maintained by FTX’s program, which allocated a third of the exchange’s trading commissions to buy and burn BNB, similar to Binance’s rolling program to buy and burn BNB.
Following CoinDesk revelations, Binance CEO announced Furthermore, the exchange will delist the remaining FTT tokens from its books over the next few months. accused FTX of lobbying “against other industry players behind their backs”. Binance made a strategic equity investment in FTX in 2019 with an exit in 2021. Relations between the two giants have soured.
almida … Offered Binance’s FTT Holding To Buy Over-The-Counter To Protect Token Price From A Major Dump, Without Explaining answer For the Binance offering, which made more public uproar From FTX Team.
Amid market uncertainty, FTX experienced an unprecedented outflow of capital from the exchange, resulting in withdrawal issues. In an effort to increase liquidity, SBF tried to find a buyer for FTX with a possible deal with rival Binance, but the latter favored a rescue acquisition after researching FTX’s books.
The final nail in the coffin was a Wall Street Journal article alleging that FTX loaned billions of customer funds to its affiliated trading company, Alameda, to make risky bets.
The troubled cryptocurrency exchange suspended withdrawals after unsuccessfully trying to find a buyer. FTX, FTX US and Alameda Research began proceedings to file for bankruptcy in the US and FTX CEO SBF resigned from his position.
FTT price dropped by more than 95% in 2 weeks. Another major asset on Almeida’s balance sheet, Solana Blockchain’s native token SOL, is down more than 55%.
On that note, the two companies having an unusually close relationship is nothing new to the crypto industry. For example, Bitfinex lost $850 million in 2018, so its affiliated stablecoin issuer Tether lent $750 million to the crypto exchange, which was roughly one-third of the total USDT supply at the time. However, both companies were able to survive the bear market and Bitfinex fully repaid the loan to Tether in 2021.
Many crypto exchanges responded to the collapse of FTX by trying to restore customer confidence and slowing down mass withdrawals.
Some major centralized exchanges like Kraken and Gate.io recently rushed to publish audited Merkle Tree proofs of store. While such proofs may prevent bank runs caused by panic, they do not provide any verifiable information about liabilities. Only a proper audit can prove solvency and only during the time period the audit was conducted.
Other exchanges such as Binance, bitfinexHuobi and Crypto.com have decided to share the blockchain addresses of their hot and cold wallets as proof of current holdings until they are able to produce fully audited Merkle Tree Proof of Reserves in the future .
Merkle trees are a cryptographic tool that allows exchanges to generate proof of store without exposing sensitive customer information.
Interestingly, the public sharing of the blockchain addresses of existing holdings has raised many questions about Crypto.com’s activities. An on-chain investigation revealed that the exchange did not disclose that it “accidentally” sent $400M of user funds to Gate.io, held a quarter billion dollars on Binance, and potentially arbitrated against its customers. Had been.
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