Could Binance Be Held Responsible For The FTX Crash?
Recent allegations have surfaced suggesting that the largest cryptocurrency exchange in terms of trade volume, Binance, was complicit in the failure of FTX. These claims were made against Binance, which is FTX's primary competitor, by the legislators.
In response, Binance forwarded a document to FTX that detailed the chain of occurrences that led up to the exchange's meltdown. This document's outline concentrated on a certain article published by Coindesk that discussed FTX ownership and featured relevant information. According to the information provided in the article, the FTX native token FTT was the most prevalent token within the exchange and was responsible for the vast majority of the Alameda Research Assets.
From the information contained in this document, it was not difficult to infer the real reason for the collapse. The failure was brought on by the theft of funds and the inappropriate use of money contributed by investors. In addition, this information was provided in a Coindesk article that was released on November 2nd.
At a hearing that was organized by the US Treasury Committee, representatives from the most prominent crypto businesses and organizations were questioned about the FTX meltdown.
After the Chairwoman of the Committee questioned CZ about whether or not he was directly or indirectly responsible for the collapse of FTX, the Vice President of Binance, Daniel Tinder, volunteered to deliver the records.
The crash may have been caused by the liquidation of FTT tokens.
Trinder was questioned as to whether or not Binance was aware that liquidating and dumping FTT tokens into the market would ultimately result in the company being liquidated and collapsed. owing to the fact that this action was almost certainly a significant contributor to the fall.
After the FTX crisis that occurred just before the crash, Binance made an announcement that it planned to liquidate all FTT holdings on its exchange. This came after Sam Bankman Fried (SBF) was discovered to have been working together with regulatory officials.
The first phase of FTX instability was caused by this move by Binance, but SBF assured users that their funds would be safe despite the fact that this turned out to be false. Soon after, FTX was on the verge of going bankrupt as the financial situation of its sister company, Alameda Research, began to deteriorate; rumors began to circulate that FTX used investor funds to manage Alameda Research. FTX had been managing Alameda Research for some time.
Binance, on the other hand, decided to buy the exchange in the evening of that same day, which brought renewed optimism to the market. However, CZ later reneged on their agreement to purchase the exchange, which caused the market to drop significantly.