Little was prepared for Major collapse of cryptocurrency exchange FTX On November 11, the crash left hundreds of thousands of customers without access to their funds, and the ripple effects wiped billions of dollars from the market, as well as casting doubts on the integrity of other crypto companies.
FTX has been so deeply entrenched in the crypto world that many companies (including cryptocurrency lenders origin And the BlockFiThey have spent the past week hastily calculating their financial vulnerability to collapse, fearing that they may be dragged downward by inflation. Others, however, have sensed opportunity in the crisis and are preparing plans to prevent further infections. “We really think this is a very good cleansing period,” Binance CEO Changpeng Zhao said during a Twitter Spaces Q&A earlier this week. “Weak projects are gone, and the industry is healthier.”
Zhao, who runs through the CZ, says he has a plan to weather the fallout from the FTX saga and rebuild trust. With one of Binance’s main competitors going out of business, the company’s voice as the world’s largest crypto exchange is becoming more influential. In a series of tweets published since November 8th, CZ announced that Binance would do so Post a transparent Proof of Reserves, To prove that they keep enough cash on hand to fund withdrawals, and Launch a recovery fund To help support legitimate projects in distress.
On November 15, he followed up with A.J blog post Determine the best practices for the exchange, which can be summarized as: don’t gamble, don’t borrow, and don’t cheat. “We cannot allow a few bad actors to tarnish the reputation of this industry when it is still in its infancy,” wrote CZ.
In the past week, several other cryptocurrency exchanges have followed suit. Bitfinex, Crypto.com, Huobi, OKX, and Kucoin have either released or promised Proof Reserves. Some, like Kraken and Coinbase, have sought to highlight that they’ve been publishing accounts for a while now. In practice, they all either pledged support for the CZ Recovery Fund or promised more investment in cryptocurrency startups.
The atmosphere between the exchanges is subdued but upbeat. They hope that more transparency will allow them to continue to attract crypto newcomers, while reducing the risk of being charged with FTX-style accountability.
“This was a huge setback for the crypto industry,” says Blair Halliday, UK managing director of Kraken, an exchange that currently handles. 600 million dollars in crypto transactions per day. “[But] We believe that sensible industry measures, such as Proof of Reserves audits, will be an important starting point for restoring the loss of confidence in the ecosystem. Similarly, Paolo Arueno, CTO at Bitfinex (which hosts $100 million In day trading), he says that only exchanges with a track record of responsible governance will survive, but “the cryptocurrency industry will emerge stronger” from the ordeal.
However, there are industry leaders who believe that the collapse of FTX should be seen as an opportunity for a deeper reassessment, a return to the founding principle of the cryptocurrency movement: decentralization.
“It’s a good learning moment for the industry,” says Hayden Adams, creator of UniSwap, the world’s largest decentralized exchange (DEX). “fact that [FTX founder Sam Bankman-Fried] He has the power to do [what he did] He talks about the fact that he was building a Centralized The product he had complete control over.”
Unlike traditional exchanges, which allow people to exchange physical currency for cryptocurrency and store assets on behalf of customers, DEXs never control customers’ funds, and trades are made on a peer-to-peer basis. According to Adams, this decentralized model eliminates the middlemen risks that got FTX into hot water in the first place.