Crypto Community Reacts to FTX and Binance Debacle

• Senator Cynthia Lummis calls for more “clear crypto rules.”
• Antitrust regulators may look at the Binance and FTX acquisition since Binance would dominate 80% of the crypto market.
• Bloomberg Billionaires Index estimates SBF’s net worth at $991m, down from $16b yesterday.
• “CZ just executed the most gangster play,” community reacts to Binance acquisition of FTX.
  

The cryptocurrency market crashed following the dispute between Sam Bankman-Fried (SBF) and Changpeng “CZ” Zhao, CEOs of FTX and Binance respectively. This drew the attention of the crypto community.

After a few weeks of relatively stable prices, the cryptocurrency market has become extremely volatile over the past couple of days. There has also been a great deal of drama happening out of the public eye. The apparent conflict between two crypto giants lasted until late Tuesday morning. It appears that this war is coming to a close, but many concerns remain unresolved, and the crypto market as a whole has taken a battering as a result.

The crypto community was swift to react to the FTX-Binance spat on Twitter and other forums.

Senator Cynthia Lummis, a prominent crypto advocate in the United States Senate, weighed in on the ongoing spat by advocating for more “clear rules:”

The recent events that have transpired between FTX and Binance are the clearest example yet of why we need clear rules of the road for digital asset exchanges in the United States.

She highlighted the significance of a bill that she had sponsored, the Lummis-Gillibrand Responsible Financial Innovation Act, which would bring digital assets within the regulatory framework. Given the apparent power of cryptopreneurs to influence prices with a few Twitter posts, Lummis emphasized:

"Market manipulation, lending activity, and whether customer funds and assets were appropriately safeguarded are just a few of the many issues my colleagues and I need to consider in the coming days."

Some have compared Binance’s acquisition of rival FTX to a “chess move,” suggesting that the company’s strategy purposefully resulted in the deal reported by DailyCoin on Tuesday. Referring to the string of comments from Binance CEO Changpeng Zhao that led to the acquisition, a Twitter user asserted that “CZ just executed the most gangster play” in crypto.

The community also saw parallels to Elon Musk’s takeover of Twitter.

Antitrust Fears Surface in FTX and Binance Deal

Anti-competitive practices are illegal and subject to severe penalties, and global regulators have the power to block huge mergers if they limit choices for consumers. SBF and CZ tweeted about the arrangements on Tuesday, sparking immediate concerns over compliance with antitrust regulations.

Based on data from CoinGecko, Binance is the largest crypto exchange in terms of trading volume, with FTX ranking among the top five. Bernstein released a research paper on Tuesday, as reported by Coindesk, that said if the deal to buy rival FTX goes through, Binance would control more than 80% of the global cryptocurrency market. This could draw the attention of antitrust regulators, the paper said.

In response to CZ’s post, Thibault Schrepel, an Amsterdam University associate professor with expertise in blockchain and antitrust concerns, tweeted: 

"Next time, check the compliance of your tweet with antitrust laws before you post.......At this stage, I wouldn’t be surprised to find this tweet in a forthcoming court document/antitrust litigation."

Direct rivals are prohibited in the US from working to protect one another under antitrust statutes like the Sherman Act. After FTX requested assistance due to a “significant liquidity crunch,” CZ claimed that he intervened to safeguard consumers. The fact that the arrangement impacts the entire firm, regardless of whether FTX US is a part of it or not, implies an illegal agreement according to Schrepel, who thinks that U.S. laws would be applicable.

On the Flipside

• According to the Bloomberg Billionaires Index, Sam Bankman-Fried may no longer be able to call himself a “billionaire” after a 94% plunge in his wealth overnight. That is the largest one-day dip in billionaire fortune ever recorded.

Why You Should Care

A few days ago, Sam Bankman-Fried was widely regarded as one of the crypto industry’s most important figures, and his exchange, FTX, was among the industry’s largest. Yet because of what has happened recently with FTX, we can see that even the most well-known and respected figures in the highly volatile crypto world may have their influence and power erode in a matter of days.

Read more on FTX-Binance fiasco: 

The Untold Story of the Alameda-FTX Crisis That Nearly Brought Down the Crypto Market