Binance CEO Says Crypto Industry Can Learn Two Big Lessons From Collapse of FTX

The CEO of crypto exchange giant Binance says the emerging industry has a lot to learn from the collapse of beleaguered exchange FTX.

A few hours ago, Changpeng Zhao announced that Binance intends to acquire FTX pending a full due diligence analysis of the business.

The surprise event followed a flurry of doubts about FTX’s financial health and concerns that the company relied too heavily on its designated holdings in the exchange’s native asset, the FTX Token (FTT).

Concerns about FTX becoming insolvent were compounded by the question that Alameda Research, the trading arm of FTX, made things worse by using tokens as collateral for loans.

Zhao To tell There are two main lessons other players in the industry can learn from the fallout.

“Two big lessons:

1: Do not use the created token as collateral.

2: Do not rent if you run a crypto business. Don’t use capital “efficiently”. Stock up a lot. ”

Zhao said Binance has never used BNB as collateral and never borrowed money.

In the short term, Zhao To tell Binance publishes a complete breakdown of its blockchain-verified reserves, informing the public of the health of the world’s largest cryptocurrency exchange.

“All cryptocurrency exchanges must do Merkle Tree proof of reserves. Banks operate on fractional reserves. Crypto exchanges should not. Full transparency.”

The collapse of FTX caused massive volatility and a collapse of the cryptocurrency market.

At publication time, Bitcoin (BTC) has fallen 9.6% over the past 24 hours to $18,606.

Ethereum (ETH) fell 14.8% to $1,328.

FTX Token (FTT) plunges 75% and is currently at $5.28.

Don’t miss a beat – subscribe to get encrypted email alerts delivered straight to your inbox

Price action confirmation

Please follow us twitter, Facebook When telegram

Surf The Daily Hodl Mix

Check out the latest news headlines


Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should exercise caution before making risky investments in Bitcoin, cryptocurrencies or digital assets. Please note that your money transfers and transactions are made at your own risk and you are responsible for any losses you may incur. The Daily Hodl does not endorse the buying or selling of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/Pavel Chagochkin

Leave a Reply

Your email address will not be published. Required fields are marked *