FTX cryptocurrency exchange has asked Binance for help, two competitors in the space and to protect users, Binance has signed a non binding LOI where they promise to take over FTX and help them in this liquidity crisis. In the meantime, price of FTX’s own token, FTT has absolutely crashed to new lows.
“I have wedding this weekend. I’ve serious amount of money left in #FTX & can’t withdraw it. This company has ruined my life. I am doomed. I hope those who caused this suffer. Unfortunately, fate of our money in FTX is not even clear. ” pic.twitter.com/h7zLqbcxLe
This is a horrible situation for the FTX and its employees as they too have been left in the dark, just like the users using it. Well funded chains with on chain treasuries and truly decentralized in the infrastructure side as well as on the governance side are the only techs that will pave the way to the real techo-social revolution. Transparency and truth. This fix is a slow self demise.
Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don’t use capital “efficiently”. Have a large reserve.
Binance has never used BNB for collateral, and we have never taken on debt.
FTX has effectively already failed and binance is graciously offered to buy them up/out. CFTC is already paying close attention., it seems though. Doubt this will go down well, though. Binance is doing due diligence now. The losses at FTX need to be smaller than the FTX assets and the value loss at Binance if they were to let FTX fail.
Hence, there should be room to getting a merger done. That’s why BTC is still above 10,000 and ETH above 1,000.
He is the Associate Editor and lives in New York. He eats charts for breakfast.