Binance Pulls Out of FTX Takeover; latest updates and comments

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  • Shivam Thakral, Managing Director of BuyUcoin, an India-based crypto exchange, offered insight via email from a market perspective:

  • “The FTX collapse wiped out over $180 billion from the crypto market as digital assets at all levels are under tremendous selling pressure. The biggest crypto, Bitcoin, is down more than 9% and is trading at a lower support level of $16,406.42 with some early signs of recovery. Ethereum is trading at $1,170.12, down more than 10% in the past 24 hours, historical data shows Ethereum is following Bitcoin’s trajectory. In the altcoin space, MATIC, AVAX, and SOL saw double-digit declines in value due to the broader sale of crypto assets.

  • “According to the latest update, Binance has withdrawn from the agreement to acquire FTX, which keeps investors away from riskier assets. Retail/institutional investor feedback on withdrawals of their funds from FTX will play a crucial role for the market recovery in the coming weeks.

  • US Senator Elizabeth Warren on Twitter calls for more aggressive monitoring:

  • “The collapse of one of the biggest crypto platforms shows how the industry seems to be smoke and mirrors. We need more aggressive enforcement and I will continue to push @SECGov to enforce the law to protect consumers and financial stability.

  • Meanwhile, in a Twitter responseCoinbase chief Brian Armstrong said the U.S. Securities and Exchange Commission doesn’t need to punish crypto firms in the country for FTX:

  • “FTX.com was an offshore exchange not regulated by the SEC. The problem is that the SEC has failed to create regulatory clarity here in the United States, so many American investors (and 95% of business activity) have moved overseas. Punishing American companies for this makes no sense.

  • Brad Garlinghouse, CEO of Ripple, also agreed with Armstrong, writing on Twitter:

  • “@SenWarren, Brian is right – to protect consumers, we need regulatory guidelines for businesses that ensure trust and transparency. There’s a reason most crypto exchanges are offshore – companies have no guidance on how to comply here in the US…Compare that with Singapore which has a licensing framework, established token taxonomy, and much more.They can appropriately regulate crypto because that they have done the work to define what “good” looks like, and know that not all tokens are securities (despite what Chairman Gensler insists)”

  • Commissioner Kristin N. Johnson of the US Commodity Futures Trading Commission (CFTC) told Bloomberg that the situation is another sign that the crypto industry needs regulation:

  • “Shocks from recent events continue to ripple through the crypto markets and beyond. And the events of this week are not isolated. In fact, if we think about it, from Three Arrows to Voyager to Celsius Network, we have seen a continuous stream of events characterized by the following elements: liquidity crisis, acquisition and consolidation. I believe these elements make it clear that if the regulations were passed today, we could do a better job of alleviating some of these concerns in advance.

  • Henry Liu, managing director (CEO) of the BTSE exchange, said that FTX would likely eventually go bankrupt:

  • “It appears that Binance backed out of the deal after discovering the amount of money needed to shore up FTX’s capital position. There aren’t many white knight investors big enough to save FTX, so bankruptcy is likely; FTX shareholders could very well be forced to take pennies on the dollar, depending on the size of the company’s liabilities.

  • “FTX has numerous lending counterparties across the industry, and its potential breach of obligations could impact other crypto platforms over the coming weeks. With that in mind, we recommend users to diversify their assets across a wider range of platforms to mitigate risk.”

  • Ariel Seidman, CEO and co-founder of blockchain mapping service Hivemapper, remains optimistic about the future of crypto in an interview with Forkast:

  • “The crypto industry, ultimately, will be fine. I remember – I was quite young – but I still remember the dot-com era when all the dot-com companies blew up the whole global economy. Dot-com and internet were fine after that. Right? So many businesses are dead. A lot of people lost their jobs, unfortunately. But eventually, you know, the internet came back. It just continued to thrive.

  • “And so if you look at what’s interesting and what’s important about crypto, that’s still true. And obviously there were mistakes made at FTX. And that’s too bad for all those people who have lost money or who are going to lose money. I feel bad about it.”

  • Alicia Kao, Managing Director of KuCoin, says the FTX situation is a loss for the crypto industry:

  • “This is going to hurt hundreds and thousands of users. They will lose their money. And that’s definitely not good for the industry as a whole. Like they weren’t just a competitor, right? They are not just another exchange. I think [they played] an important role in the crypto industry. So I think we’ll see, maybe there’s good news, and maybe there’s opportunities that we could also help them protect the whole industry.

  • US Senator Cynthia Lummis, in her public comment made before Binance officially withdrew its acquisition announcement, says the situation calls for more transparent rules and guidelines for crypto exchanges.:

  • “Recent events between FTX and Binance are the clearest example yet of why we need clear rules of conduct for digital asset exchanges in the United States… Manipulation of the market, lending activity and the proper protection of client funds and assets are some of the many issues my colleagues and I need to consider in the days ahead. Transparent and fair foreign exchange regulations, as provided by the Lummis-Gillibrand Responsible Financial Innovation Act, are essential to ensure client protection while promoting responsible innovation.

  • Fabian Astic, Managing Director and Global Head of DeFi and Digital Assets at Moody’s Investors Service, said Forkast in an interview that the FTX situation could endanger the traditional financial sector:

  • “Now the question that remains is the connection between crypto finance and what is happening here with FTX developments and traditional financial markets. And I would say that so far crypto losses have been largely contained globally of crypto and there has been very little contagion from crypto finance to traditional financial markets, and the reason is that the links between crypto finance and traditional finance are quite limited.

  • “That being said, we’ve seen more and more traditional institutions exposed to crypto assets and there are new assets and structures connecting the two worlds. And because of those connections, if risks like leverage accumulate in crypto finance, where these risks are difficult to track due to the lack of transparency I mentioned earlier, this could lead to instability in traditional finance.”

  • Stephen Innes, managing partner at SPI Asset Management, says this could be the “tipping point” for crypto investors who suffered a series of insolvencies earlier this year:

  • “You cannot deny the growing correlation between Bitcoin and risky assets. FTX news has an outsized effect on asset prices. Once the second-largest crypto exchange in the world, FTX told investors that without more capital, bankruptcy is likely. Hence, all ships were sinking on the crypto tumult. The fallout from Bitcoin is not insignificant, and given the extent of holding crypto coins, this could mean more forced liquidation of other assets to cover margin calls as long investors were massively caught. against the grain.

  • “Unfortunately, for crypto buyers, there is no lender of last resort. As a result, the sell-off may have more legs to run as industry liquidation hunters remain on the hunt selling a variety of cryptos and native FTX coins to protect their downside as a crypto contagion effect.Indeed, this could be a tipping point for crypto after investors find themselves with a series of major insolvencies in the world. industry earlier this year.

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