It’s been one more dreamlike week in the crypto world. After an extremely open disagreement and bits of gossip that FTX has liquidity issues, today the Presidents of Binance and FTX gave joint tweets that the two crypto forces to be reckoned with had agreed. ” We signed a non-binding Letter of Intent to fully acquire http://FTX.com and help alleviate the liquidity crunch “Changpeng Zhao, also known as CZ, is the CEO of Binance.
How the Binance-FTX deal came to be Sam Bankman-Fried, CEO of FTX and the company’s founder, offered to buy up struggling crypto companies for the benefit of the industry. FTX.US recently won an auction to acquire the assets of Voyager, a failing crypto lender. Now, it appears that FTX should be added to the list of crypto businesses that have failed.
A CoinDesk article last week raised concerns that Alameda Research, Bankman-Fried’s trading firm, was overly dependent on FTX’s native token, FTT. As a result, there were concerns that Bankman Fried’s crypto empire might have been built on shaky ground. FTT holders, including Binance, acted to protect themselves and sold their holdings after the Terra ecosystem collapsed. On Tuesday, November 8, news reports suggested that FTX had stopped processing withdrawals, bringing things to a head.
A few hours later, Binance purchased the FTX announcement. “FTX asked for our assistance this afternoon,” CZ tweeted. There is a significant shortage of liquidity.”
Bankman-Fried concurred. Things have come full circle, and the initial and final investors of http://FTX.com are the same: we have come to a settlement on an essential exchange with Binance for http://FTX.com (forthcoming DD, etc.),” He stated Additionally, Bankman-Fried emphasized that customers would be safeguarded.
Although Binance will still need to conduct its due diligence, the world’s largest cryptocurrency exchange is about to expand in principle. On the news of the deal, Binance’s native token, Binance Coin (BNB), rose sharply at first but has since fallen. As FTX’s woes shook investor confidence in the crypto market as a whole, many top cryptocurrencies have lost more than 10% in the last 24 hours.
What it means for customers The deal should not have any effect on Binance and FTX.US customers in the United States. The US is a distinct nation. According to Bankman-Fried, the withdrawals from FTX.US are “operating normally” and the exchange is “fully backed 1:1.”
However, if you are a customer of FTX.US, you might want to think about moving your cryptocurrency funds to another exchange or external crypto wallet. During the early part of this year, when other platforms were struggling, their leaders repeatedly reassured customers that their funds were safe until they stopped allowing withdrawals. It was too late at that point.
If you are a global FTX client, there’s a decent opportunity for your assets will be protected – – as long as the Binance bargain goes through. However, there are no assurances. Today, I was able to get some money out of FTX, but other customers had problems earlier. Take steps now to at least attempt to withdraw your cryptocurrency if Bankman-Fried’s assurance that your fund will be protected fails to persuade you.
If you’re new to cryptocurrencies, it’s understandable to want to keep your cryptocurrency on the exchange where you bought it. You can frequently acquire higher marking rewards, you don’t have to pay withdrawal expenses, and you don’t need to explore the occasionally difficult way of opening your crypto wallet.
Nonetheless, one of the strong parts of digital currency is that you don’t have to depend on any incorporated bodies. When you start your bank, there are risks and a steeper learning curve. For starters, there is no convenient “forgotten password” button. However, if you contrast the difficulties of managing a wallet with those of maintaining assets on a crypto exchange that is experiencing liquidity issues, a crypto wallet may be the better option.
Bottom line: “Not your keys, not your crypto” is a common adage in the crypto sphere. The idea is that you do not fully own your cryptocurrency if your assets are on a centralized exchange and you do not control the keys. Your funds could be at risk in the event of a platform failure or hack. This year has demonstrated that cryptocurrency platforms can and do fail.
Customers of FTX and the assets they hold may be safeguarded by Binance’s commitment to purchase FTX. However, a letter of intent is only the beginning, and neither the outcome of the transaction nor the fate of customer assets is known for certain. Keeping your funds in a wallet that you control is one way to safeguard them, regardless of the exchange you use. For more information, check out our guide to the best cryptocurrency wallets if you don’t already have one.
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