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Luke Huigsloot
Nov 09, 2022


BINANCE CEO SHARES ‘TWO BIG LESSONS’ AFTER FTX’S LIQUIDITY CRUNCH

CZ took to Twitter on Nov. 8 sharing “two big lessons” that crypto companies
should learn amid the downfall of crypto exchange FTX.

20472 Total views
69 Total shares
Listen to article
2:31

News
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Collect this article as an NFT

 * 
 * 
 * 
 * 
 * 
 * 
 * 
 * 

Binance CEO Changpeng “CZ” Zhao has shared his take on “two big lessons” to be
learned from the FTX saga, saying cryptocurrency firms shouldn’t use their own
tokens as collateral and should also keep “large reserves.”

In a Nov. 8 tweet, Zhao laid out two learnings after the significant “liquidity
crunch” at FTX, which has ultimately resulted in a non-binding letter of intent
from Binance to acquire the struggling exchange.



Zhao shared that his first lesson is to ensure a firm’s collateral should not
consist of a token that it has created and claims his exchange’s token — BNB

BNB

$310

Binance Coin

-0.05%

MARKET CAP

$50.54b

VOL. 24H

$118.09m

BNB $381.55k

— has never been used as collateral for its services.


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FTX’s liquidity issues appeared to have come after a Nov. 6 tweet from Zhao
saying Binance would be liquidating its holdings of FTX Token

FTT

$1.58

FTX Token

-0.19%

MARKET CAP

$487.86m

VOL. 24H

$868.69k

FTT $549.11k

following “recent revelations” related to reported ties between FTX and the
trading firm Alameda Research showing the firm had significant FTT holdings.

While Binance does not currently disclose proof of what reserves it uses as
collateral, Zhao mentioned in a Nov. 8 tweet that in an effort to be fully
transparent Binance will soon provide proof of reserves, adding:

> “Banks run on fractional reserves. Crypto exchanges should not.”

Zhao’s second lesson from the downfall of FTX is that crypto businesses
shouldn’t be borrowing and instead should opt to maintain large reserves — which
could be in reference to FTX users complaining of sluggish withdrawals on Nov.
7, sparking rumors the exchange didn’t have enough to cover user funds.

Related: Bitcoin price hits 2-week lows as FTX ‘bank run’ drains BTC reserves

Zhao’s tweet confirming Binance’s FTT holdings liquidation ended up triggering
what some called a “bank-run” on the exchange, with analytics platform
CryptoQuant data revealing that FTX’s Bitcoin

BTC

$23,890

Bitcoin

-0.56%

MARKET CAP

$461.09b

VOL. 24H

$1.14b

BTC $47.71k

balance had fallen by 19,956 on Nov. 7 alone.

At the time of writing, FTT is down 75% in the last 24 hours, with the last
price around $5.70 at the time of writing compared to its opening price of
$22.14.

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 * #Bitcoin
 * #Altcoin
 * #Business
 * #Changpeng Zhao
 * #Cryptocurrency Exchange
 * #Binance
 * #Liquidity
 * #FTX Token
 * #FTX



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Derek Andersen
Nov 09, 2022


MARTIN SHKRELI REASSURES DO KWON ABOUT LIFE IN PRISON AS THEY DISCUSS FTX AND
BINANCE

The two showed up to talk about the big merger news in crypto on a Twitch
podcast.

11526 Total views
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 * 
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The huge changes in the crypto exchange market on Nov. 8 led to equally massive
waves of commentary. The UpOnlyTV channel on Twitch was a beneficiary of this
activity, with Do Kwon and Martin Shkreli showing up simultaneously to talk
about the deal between Binance CEO Changpeng Zhao (CZ) and FTX CEO Sam
Bankman-Fried (SBF) for the purchase of FTX.

Shkreli, sometimes referred to as the “Pharma Bro” for his role in that industry
before his conviction for securities fraud, had doubts that the Binance-FTX deal
would work out. “I think the hole [FTX’s balance sheet shortfall] is a lot
bigger than people think and I think there’s a good chance Binance walks away,
and I think that’d be terrible,” Shkreli said.

Kwon, whose Terra Labs issued the TerraUSD (UST) stablecoin, now known as
TerraUSD Classic (USTC), that collapsed catastrophically in May, had more
confidence in the deal, saying:

> “I’m assuming the sale price is at a reasonable discount to whatever the
> private funding round was, but if CZ steps in and makes users whole, there’s
> no reason why he [SBF] would be in any meaningful distress. He’ll probably
> move on to something else.”

But, when asked if he would invest in an SBF startup, Kwon demurred. “I’m not
much of an investor,” he said. “I think it’s too early to tell.”

Speaking about the role of his “bravado and persona” in the Terra/Luna collapse,
Kwon said, “I don’t think that what happened with UST would have been any
different if the way I conducted myself on Twitter was different. Actually, how
I am in real life and how I am on Twitter is pretty different. […] There is
value in being entertaining and funny.”

“Well, in the list of villains for this year, Do is moving further down,”
Wintermute CEO Evgeny Gaevoy, another guest on the show, conceded. “It’s not
that bad anymore, I guess, compared to Alameda and Three Arrows. […] He was a
bit cocky, but whatever.”

Another guest called him, “A sociopath, to be blunt,” adding, “I’m not a huge
fan.”

Commenters on the live stream were no more forgiving. “DO KWON HAS TO PAY FOR MY
LOSSES,” one wrote. “SCAM KWON TO JAIL,” wrote another.

Kwon did not respond to the speakers but later said, “I think what has been
really helpful is the support of people we have worked with for years. I think
the bad publicity has made it really hard for them to speak out in favor, in
defense of what happened with UST, but I’d like to think that, for people we’ve
worked with for a long time, we’ve had an opportunity to display our character
and our good intentions.”

Related: Binance's FTX acquisition seen as chess move by crypto community

Shkreli considered the current situation a low point, saying:

> “If the entire banking system got drunk or high or something, this is how it
> would operate, right? You have real adults in the room in real banking and
> maybe that’s because of regulators and maybe it’s not.”

Shkreli added, taking a poke at Binance by repeating an unfounded rumor, “The
biggest problem is that we don’t know what Binance’s balance sheet is. Why are
we trusting these guys? […] It’s a CCP appendage.” 

> - FTX secretly insolvent
> - BTC testing new lows
> - Alameda toast
> - Binance planning to acquire FTX
> - FTT down 80% headed to 0
> - CZ announces proof of reserves
> - Su Zhu re-emerges
> - Do Kwon and Martin Shkreli on UpOnly
> - Coinbase temporarily down
> 
> How was your day at the office?
> 
> — Yassine Elmandjra (@yassineARK) November 8, 2022

Shkreli was sympathetic to Kwon, however, telling him:

> “I just want to let you know jail’s not that bad, it’s not the worst thing
> ever, so don’t fret. I hope it doesn’t happen. But if it does happen, it’s not
> that bad.”

“Good to know,” Kwon replied, even though he started his conversation on the
podcast by saying “I don’t think I’m on the run.” He did not disclose his
whereabouts.

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 * #Business
 * #Binance
 * #FTX Token
 * #FTX



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