Amid the FTX collapse, Coinbase CEO Brian Armstrong tweeted that Coinbase does not have significant exposure to FTX and its platform coin FTT, as well as Alameda exposure.

Coinbase CEO Brian Armstrong said that the fall of the FTT token on the FTX exchange appears to be the result of high-risk business practices, including conflicts of interest between related entities and misuse of customer funds (lending user assets).

The Coinbase exchange said it would not engage in this type of high-risk activity. Without instructions from customers, Coinbase said it never uses customer deposits for other business and users can withdraw assets at any time.

As a publicly traded exchange in the United States, Coinbase’s financial audit is open to all investors and customers. Coinbase has never issued its platform token.

Armstrong emphasized that Coinbase should continue to work with regulators and legislators around the world in the future to establish reasonable regulations for centralized exchanges or custodians in each market to build trustworthy and trustworthy products for the industry, but currently, there is still no level playing field. . countryside.

Sam Bankman-Fried, founder and CEO of cryptocurrency exchange FTX, manages assets through Alameda Research, a cryptocurrency quantitative trading firm he founded in October 2017.

This summer, FTX CEO Sam Bankman-Fried has been buying cryptocurrency companies that have been caught up in the credit crunch caused by the sudden collapse of cryptocurrencies Luna and UST or TerraUSD.

However, the leaked Alameda Research balance sheet shows that Alameda Research’s balance sheet is mostly made up of FTT, a token issued by FTX. However, FTT’s liquidity is less than ideal, which has sparked investor concern that Alameda could face a liquidity crisis.

This news is sure to lead to hyperinflation of the exchange’s native token, FTT. While the native token FTX FTT has fallen by 71.6%, CoinGecko it showed, and the company’s net holdings of crypto assets have plummeted 83% in the past two days.

In the long term, the crypto industry is expected to build a better system using DeFi and self-custody wallets, without relying on third parties. Everything can be publicly audited on the chain.

The analysis suggests that weakness in cryptocurrency exchange FTX this time around may provide short-term benefits to other exchanges like Coinbase. Still, FTX’s liquidity risk has also raised concerns about the overall vulnerability of the industry. Retail investors may consider moving assets to private wallets if the centralized exchange issue persists.

Image Source: Shutterstock