The dispute between the CEOs of cryptocurrency exchanges FTX and Binance –Sam Bankman-Fried (SBF) and Changpeng “CZ” Zhao– not only plunged cryptocurrency prices, but also reminded regulators that they must intervene to prevent similar falls in the future.
Since CZ publicly announced the intention of Binance to liquidate their holdings of the FTX token (FTT), investors who anticipated a price crash began to sell their shares in the FTT to minimize their losses. What followed was a sharp 86% drop in the market value of FTT, falling from the $22 to $3 range in a matter of hours.
Nevertheless, the day concluded with the announcement by CZ of Binance’s intention to acquire FTXand SBF agreed with the measure citing consumer protection. In reaction to this event, the United States Senator Cynthia Lummis -known in the community for her firm belief in cryptocurrencies- stressed the need for clearer regulation for cryptocurrencies:
“The recent events between FTX and Binance are the clearest example yet of why we need clear rules for digital asset exchanges in the United States.”
He pointed out the importance of Lummis–Gillibrand Act of Responsible Financial Innovation, a bill backed up by Senator Lummis who intends to place digital assets within the regulatory perimeter.
Given the obvious influence of players in the crypto space in influencing crypto prices with just a few tweets, Lummis noted:
“Market manipulation, credit activity and whether client funds and assets were properly safeguarded are just a few of the many issues my colleagues and I must consider in the coming days.”
While SBF has chosen to remain silent for the past 16 hours at press time, CZ revealed that Binance’s SAFE insurance fund has been filled with $1 billion worth of cryptocurrencies to adjust for recent price fluctuations.
As a result of the FTX-Binance fight, andSBF’s personal wealth plummeted by 94%, stripping him of his billionaire status overnight.
Before the announcement of the acquisition by Binance, the Bankman-Fried’s 53% stake in FTX was worth about $6.2 billion.
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