
- Coinbase allegedly has no โmaterial exposureโ to FTX, FTT, or Alameda Research.
- Armstrong partly blames the hazy U.S. regulatory environment for the implosion.
- COIN closed Tuesday, November 9th, at $50.83, down 10.78% from the prior 24 hours.
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 โmaterial exposureโ to FTX, its native FTT token, or Alameda Research.
Armstrong further used the opportunity to call out FTXโs actions, calling them โrisky business practicesโ, which he believes included โconflicts of interest between deeply intertwined entities, and misuse of customer funds (lending user assets)โ.
Sponsored
Armstrong was sure to emphasize that part of the problem leading to FTXโs implosion is that โregulators have been focused onshoreโ, while customers chose, in turn, to move their funds to exchanges with โopaque and risky business practicesโ.
โTo 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. Thatโs bad for the US and Americans are still losing money in these overseas blowups,โ the Coinbase CEO underlined in a tweet.
In Armstrong’s opinion, โheavy-handedโ 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.
โWe 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,โ he opined.
Armstrongโs comments come in response to the sudden collapse of Sam Bankman-Friedโs 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 usersโ funds, as collateral to take out loans and engage in leverage trading.
FTX has seemingly managed toย convinceย Binance CEO Changpeng “CZ” Zhao to step in and โcover the liquidity crunchโ. 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.
On the Flipside
- Itโs unclear how far the FTX contagion has spread.
- Itโs unclear what effect, if any, the FTX crash will have on competitors such as Coinbase.
Why You Should Care
Coinbase is one of the most used crypto exchanges in the world, and its assurances that it has no exposure to FTX, FTT, or Alameda have been welcomed with relief by the crypto community.