FTX Near-Collapse Marks Another Frosty Day In Crypto Winter
Cryptocurrency prices have been sent spiralling as Binance, the world’s largest crypto exchange, withdrew from merger talks with FTX. Bitcoin fell to below $16,000, marking a two-year low, while FTX’s native token has lost approximately 90% of its value in the last week.
FTX Teeters On The Brink Of Collapse
FTX has been battling the crypto equivalent of a run on the bank. After concerns about the firm’s financial health surfaced, customers rushed to withdraw $6 billion in just a few days.
Part of the pressure came from FTX’s CEO, Mr Zhao, who tweeted on Sunday that Binance would be selling its holdings in the firm’s native token, FTT.
The token went from being worth around $20 on the weekend to just $3 several days later. As a result, the crypto’s value couldn’t exceed the company’s liabilities, effectively rendering FTX insolvent.
Binance Pulls Out Of Bailout Deal
Despite initially promising talks about the world’s largest crypto exchange stepping in to salvage the firm, Binance walked away from the deal stating that the challenges FTX were tackling were “beyond our control or ability to help”.
Reports that FTX were under investigation in the US for the mismanagement of client funds added to Binance’s concerns. The US Exchange Commission (SEC) is looking into whether FTX kept customer assets separate and whether it was trading against its users.
Binance added on Twitter: “Every time a major player in an industry fails, retail consumers will suffer. 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”.
Alternatives To FTX
In what has been a tumultuous year, even by cryptocurrency standards, many investors will be cautious about the firms they entrust their funds to. FTX is just one of a long list of crypto companies that have failed due a lack of cash reserves.
Fortunately, there remain a couple of top-rated and trustworthy crypto exchanges in 2023:
- Kucoin is an established cryptocurrency exchange that offers spot and margin trading in addition to lending services and automated bots. Launched in 2017, the company now has over 10 million customers and a presence in 200 countries. Users can buy, sell and trade over 600 tokens, from big names like Bitcoin and Ethereum to emerging coins. In the wake of the FTX scandal, Kucoin has also issued a statement to reassure its users that it provides complete transparency and will not mismanage client funds. The crypto exchange guaranteed 1:1 withdrawals and plans to release Merkle tree proof-of-reserves or POF over the next month or so.
- Binance is the world’s biggest crypto exchange by daily trading volume and has over 28 million users. With tens of billions traded each day and more than 1400 crypto pairs, the firm offers a range of trading opportunities. Binance also offers support for services where clients can interest on their tokens, as well as a digital wallet and mining program. Adding to the firm’s appeal is its robust approach to security with a multi-tiered architecture and secure asset fund to protect client capital.
For more options, check out our full list of recommended crypto brokers below.