With the recent insolvency of FTX, the crypto market has entered one of the most serious crises in its history. One of the world’s largest cryptocurrency exchanges failed, causing a severe market crash. Binance could be the biggest winner. Can Binance utilize even more market power now that FTX has gone bankrupt? Will Binance take over the crypto market following FTX bankruptcy. Let’s take a look at it in more detail.
How did Binance cause the FTX crash?
Several questions have been raised in recent weeks about the financial situation at the crypto exchange FTX. According to some reports, FTX and Alameda Research, both founded by Sam Bankmann-Fried, have had balance sheet discrepancies and are highly dependent on the FTX token’s value.
As a result, Binance CEO Changpeng Zhao stated that the company plans to liquidate its FTX tokens in the coming weeks. This resulted in a massive sell-off of FTX tokens, resulting in a 90% drop in FTX token price. As a result, FTX eventually went bankrupt.
How should we analyze Binance’s behavior?
The Binance CEO’s announcement ultimately caused the FTX mansion of cards to collapse. Binance has been alleged of enormous market manipulation by many people. Binance’s behavior and attitude, in this case, are undoubtedly reproachable.
Binance, of course, wants to position itself as a savior. Is the world’s largest cryptocurrency exchange, however, truly clean? According to a Reuters report, strange practices were being used behind the scenes:
- Prohibited Products and Services: Binance is accused of selling synthetic products without a legal basis. Binance, on the other hand, can avoid many regulations due to the lack of a fixed company location.
- Charity over honest marketing: Binance frequently uses donations as an excuse to avoid marketing regulations. A lot happens in the gray area, and the money flows are vague.
- Dubious management: Michael Wild, Doron Rozenberg, and Emir Besirbasic are all eToro employees who work in Binance’s management. They appear to be looking for legal loopholes in the European market in collaboration with the company.
- Reuters also revealed in its investigation report that Binance conducted transactions with other countries that are illegal under US and UK law.
Crypto giant Binance has processed Iranian transactions worth $8 billion since 2018, blockchain data seen by @Reuters shows, despite U.S. sanctions aimed at cutting Iran off from the global financial system https://t.co/Gqvb8NjvXd pic.twitter.com/FheUOWJcix— Reuters (@Reuters) November 4, 2022
Is Binance the villain?
To summarize, it is likely that Binance intended to sell FTT tokens on the market. This should bring the FTX token price to its knees. This creates market uncertainty, and as a result, more and more investors exit the FTT, causing the price to plummet.
Binance has not yet purchased FTX. We could see a situation similar to Elon Musk and Twitter, where the billionaire strategically waited for the price of the Twitter stock to fall. Binance could now do the same with FTX’s value. Eventually, the company would have absorbed one of its main competitors. So, is Coinbase the next victim?
FTX bankruptcy: Is there a market centralization of power?
The failure of FTX removed a significant Binance competitor from the market. As a result, the largest cryptocurrency exchange can now concentrate even more power. Previously, FTX and Coinbase competed for second place behind Binance among the largest cryptocurrency exchanges. However, the gap to number one is already substantial.
Decentralized structures are always valued in the blockchain world. A quasi-monopoly of Binance thus hovers as a risk if other large crypto exchanges fail in the future.
It is therefore critical that Binance’s competitors now manage their balance sheets transparently and responsibly. Binance’s concentration of power would almost certainly harm the market as a whole. Competition helps to stimulate business in this area as well.
FTX bankruptcy and why did the price of TWT skyrocket?
The primary reason for Trust Wallet Token’s massive rally appears to be an exodus from centralized cryptocurrency exchanges following the collapse of FTX.
Trust Wallet Token (TWT) has increased by nearly 150% in the last few days, outperforming the cryptocurrency market, which has seen its net capitalization collapse by well almost $100 billion in much the same time frame.
Resentment in centralized exchanges makes it appear to have rising demands for self-custody wallets. Binance CEO Changpeng Zhao’s endorsement of the token’s parent platform, Trust Wallet, has also significantly contributed to the TWT price spike.
TWT is a utility token for Trust Wallet, a platform that permits traders to purchase, sell, and obtain nonfungible tokens (NFTs), as well as exchange and claim cryptocurrencies. As a result, TWT is generally used as a centralized exchange token, whereas Trust Wallet enables people to control their funds.
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