crypto exchanges

Can proof-of-reserves prevent future crypto exchange collapses? • ZebethMedia

By zebethcontrolPosted on November 11, 2022Posted in Binance, Chainlink, Crypto, crypto ecosystem, crypto exchanges, EC Blockchain, EC Cryptocurrency, FTXNo Comments

A number of crypto exchanges are rushing to publish proof-of-reserves in a seeming attempt to reassure investors their funds are safe as fellow exchange FTX melts down. Proof-of-reserves (PoR) are independent audits by third parties that aim to provide transparency and evidence that a custodian holds the assets it claims to own on behalf of its clients. Auditors then aggregate balances into something called a Merkle tree, which entails all client balances. FTX exploded this week following a CoinDesk report that showed a June 30 balance sheet of its affiliate trading firm, Alameda Research, was largely made up of FTX’s native token, FTT. This all could have been avoided with PoR, Sergey Nazarov, co-founder of Chainlink, said to ZebethMedia. “There was a balance sheet issue and it became known to many depositors all at once,” Nazarov said. “And because it was a surprise, there was a bank run that led to insolvency.” But imagine if depositors knew what FTX and Alameda Research’s balance sheets were from the beginning.

Binance backs out of deal to buy FTX • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, Crypto, crypto exchanges, FTXNo Comments

The world’s largest crypto exchange by volume, Binance, said it would walk away from a deal with the third largest crypto exchange by volume, FTX. On Tuesday, Binance signed a letter of intent to purchase its troubled competitor, FTX, in what appeared to be a potential bailout of the latter amid a liquidity crunch. But just a bit over 24 hours later, that plan crumbled. Binance backed out after reviewing the company’s structure and books, it said in a statement to the Wall Street Journal. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of [FTX],” Binance said in a tweet. “Every time a major player in an industry fails, retail consumers will suffer,” Binance continued. “We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.” Binance and FTX did not immediately respond to ZebethMedia requests for comment. Earlier today, sources familiar with the matter told CoinDesk that FTX’s loan commitments raised concerns among Binance’s top brass. The report follows Binance CEO Changpeng Zhao tweeting that FTX “going down is not good for anyone in the industry.” This is a developing story and may be updated if new information arises.

Binance’s plan to acquire FTX is ‘real-life Game of Thrones’ as crypto winter winds blow • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in Binance, Crypto, crypto ecosystem, crypto exchanges, cryptocurrency, EC Blockchain, EC Cryptocurrency, FTXNo Comments

Binance, the world’s largest crypto exchange by volume, has signed a letter of intent to buy its closest competitor, FTX, making huge waves in the crypto community after the putative billionaire CEOs of the exchanges engaged in a multi-day public dispute on Twitter. “It’s like real-life ‘Game of Thrones,’” Alex Taub, founder and CEO of DAO-focused platform Upstream, said to ZebethMedia in a message. Today’s acquisition news was bigger than the HBO show’s dramatic “Red Wedding” massacre scene. FTX was quick to spin the potential sale of its business as a win. “A *huge* thank you to [Changpeng “CZ” Zhao], Binance, and all of our supporters,” FTX founder and CEO Sam Bankman-Fried said in a tweet on Tuesday regarding the deal. “This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.” But it’s a slam-dunk outcome for Binance after a heated spat. Investors, founders, and operators throughout the crypto community noted that the deal makes Binance appear strong amid a bear market for the sector while raising questions about FTX’s solvency and financial performance. “It’s crypto winter now, and it’s time when the market checks everyone for weakness,” Serhii Zhdanov, CEO of cryptocurrency exchange EXMO, said to ZebethMedia. “Exchanges as main players bear the main damage because of low liquidity, while their main income is from trading fees. It’s enough to check the change [in] trading volumes for the last year to understand how tough the situation is. “Naturally, it’s time of mergers and acquisitions,” Zhdanov said. “We might see more such stories in the near future.”

FTX’s seemingly sluggish withdrawals raise eyebrows • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in Crypto, crypto exchanges, cryptocurrency, ethereum, FTX, stablecoinNo Comments

Withdrawal transactions for customers using FTX, the third largest crypto exchange by volume, have seemingly been limited to a nominal amount or none at all, according to multiple on-chain data sources. Stablecoin withdrawals from FTX dropped to zero around 6 a.m. ET on Tuesday, according to data on CryptoQuant. Meanwhile, withdrawals of ether, Ethereum’s token, have been small during the same time frame, CryptoQuant data also showed. Etherscan data also revealed that FTX withdrawals are currently executing for up to 0.12, or about $170.79, of ether. “As FTX’s net crypto asset holdings decreased by 83% over the past two days, they seem to be struggling to process withdrawals,” Ki Young Ju, CEO and co-founder of CryptoQuant, said to ZebethMedia. “For example, when their users exchange ETH for stablecoins and request withdrawals, FTX has to bring stablecoin liquidity to process the withdrawal via markets or other exchanges.” FTX’s stablecoin reserve also decreased 93% over the past two weeks, and it has injected USDC liquidity from Alameda Research wallets, Ju said. “This suspension of withdrawals seems to be a liquidity problem for user withdrawals.” A spokesperson from FTX did not reply to ZebethMedia’s request for comment. Some individuals in the crypto community tweeted that they “successfully withdrew” ethereum and bitcoin from FTX, while others replied that they have been waiting hours to withdraw funds. Last night, FTX tweeted that its team has been processing the backlog of withdrawals and added that the “queue is decreasing and getting back to more reasonable levels; nodes and banks catching up.” Since then, FTX and its CEO, Sam Bankman-Fried, have not released any statements regarding the pause, as of the time of publication. The situation has transpired as FTX is facing heat from the world’s largest crypto exchange, Binance, after its CEO, Changpeng “CZ” Zhao, tweeted that his exchange would slowly withdraw billions of its holdings in FTX’s native token, FTT. On Monday, Bankman-Fried tried to calm the waters in regard to FTX’s liquidity via a series of tweets indirectly responding to Zhao and Binance’s liquidations. “A competitor is trying to go after us with false rumors,” Bankman-Fried said. “FTX is fine. Assets are fine.” Bankman-Fried said FTX has enough to cover all client holdings and it doesn’t invest in client assets. He then tweeted he would “love” if Zhao and FTX could “work together for the ecosystem.” FTT is currently trading at $14.65, down about 35%, according to data from CoinMarketCap.