Cryptocurrency exchanges have been reaffirming the public of their reserves to ease customer fears, as the market reacts to the crumbling of industry giant FTX.
Binance, which is one of the largest crypto trading platforms in the world, has said it will provide proof that it holds sufficient reserves to match liabilities to customers, according to a report from the Financial Times.
A similar sentiment has been issued by other trading platforms Crypto.com and Deribit.
Last week, cryptocurrency exchange giant FTX filed for bankruptcy in the US and is seeking protection as it tries to return money to users. According to the Financial Times, FTX had less than $1bn in easily sellable assets against $9bn in liabilities.
The report states that Tether’s eponymous US dollar stablecoin, which is the largest in the industry, has seen around $3bn in redemptions over the past four days as people take funds out of the digital asset space. Similarly, cryptocurrency ether has seen balances drop by 7% in the past fortnight to 22.9 million across major exchanges. The Financial Times stated that at current exchange rates, this is a fall of around $2bn and suggests people are moving from centralised holdings to their own storage systems.
The cryptocurrency market has been in panic mode this past week. Binance’s chief executive even warned of a major crypto crash that could resemble the 2008 financial crash.
Genesis recently revealed it would receive a $140m equity infusion from its parent company, Digital Currency Group. The funds were deployed after Genesis revealed it had $175m locked in a trading account of FTX.
Crypto exchange Coinbase recently announced it would write off the investment its ventures division had made into FTC in 2021, Reuters claimed. Goldman Sachs has also cut the Coinbase stock price target from $49 to $41 but is maintaining its ‘sell rating.’
Coinbase has been trying to distance itself from FTX. Coinbase founder and CEO Brian Armstrong recently spoke to CNBC urging the US lawmakers to see this FTX crisis as an incentive to better clarify crypto regulations.
In the interview, Armstrong states that FTX is not representative of every crypto company and that Coinbase has a very different strategy.
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