Brian Armstrong, CEO of Coinbase (COIN), one of the largest crypto exchanges in the world, has spoken out on the FTX (FTT) debacle, assuring users and investors that the company has no “material exposure” to FTX, its native FTT token, or Alameda Research.
Armstrong further used the opportunity to call out FTX’s actions, calling them “risky business practices”, which he believes included “conflicts of interest between deeply intertwined entities, and misuse of customer funds (lending user assets)”.
Armstrong was sure to emphasize that part of the problem leading to FTX’s implosion is that “regulators have been focused onshore”, while customers chose, in turn, to move their funds to exchanges with “opaque and risky business practices”.
“To take the U.S. as an example, 95%+ of crypto trading has developed overseas because crypto regulation in the US has been hard to navigate. That’s bad for the US and Americans are still losing money in these overseas blowups,” the Coinbase CEO underlined in a tweet.
In Armstrong’s opinion, “heavy-handed” regulation is not the way to go, as it would only serve to force crypto companies and users to move overseas, which would just escalate the problem.
“We should continue to work with policy makers to create sensible regulation for centralized exchanges/custodians in each market (as we've been doing for some time), but then we need to see a level playing field enforced, which hasn't happened to date,” he opined.
Armstrong’s comments come in response to the sudden collapse of Sam Bankman-Fried’s FTX crypto exchange, as its native token, FTT, plunged in value by more than 90% two days after a report revealed that Bankman-Fried owned Alameda Research, a crypto trading firm, holds the majority of its trading power in FTT.
Critics speculate that the two closely linked entities used FTT, along with users’ funds, as collateral to take out loans and engage in leverage trading.
FTX has seemingly managed to convince Binance CEO Changpeng “CZ” Zhao to step in and “cover the liquidity crunch”. However, it is unclear whether Binance pursue a total acquisition of the troubled exchange.
Following the ripples from the FTX news, COIN stock closed Tuesday, November 9th, at 10.78% lower than Monday at $50.83, according to data from Yahoo! Finance. At the time of writing, COIN is down a further 6% in premarket trading for the past 24 hours.
Compiled by Metacrunch. Metacrunch is a news complier and aggregator platform which aims to spread awareness and updates on Metaverse, Web 3.0 Technology, Blockchain, Cryptocurrency, NFTs, Airdrops and many more.
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