Following the recent FTT crash, several crypto giants, including Tether, Circle, and Coinbase, were asked to provide transparency about their involvement with FTX.
The current death spiral and controversies related to Alameda Research, owned by FTX, have created a buzz in the cryptocurrency sector, fading the trust of investors and traders from the crypto market. The leaked balance sheet of trading Firm Alameda Research owned by Sam Bankman-Fried, claimed that most of the firm’s assets worth $3.2 billion are locked in FTX’s native token FTT, which may bring a sudden crash if sold. However, it seems that the crypto market is going with the flow as the prices of several cryptocurrencies witnessed a dramatic impact in the last 24 hours. Moreover, the current situation has forced crypto giants to provide transparency about their involvement with FTT tokens and risks, as Circle, Tether, and Coinbase have taken the call and assured users and traders that they were not connected to FTT tokens.
FTX Mess Compromises Trust And Triggers Doubts
The current death rally of cryptocurrencies surrounding the FTX and Binance deal has triggered possible risks and contagion effects of stablecoins. Experts suggest if the takeover of Binance did not appear, the market could bring the worst demise like LUNA or Celsius.
Recently, the crypto community brought up some concerns related to the current FTT drama and asked some prominent crypto giants about their involvement with it. In response, Tether CTO Paolo Ardoino clarified that the USDT issuer has no connection to FTX or Alameda. According to him, Tether has previously generated a lot of stablecoins for users’ demand for a lot of Tether. He said, “Alameda has issued and redeemed a lot of USDt in the past. But no credit exposure has been matured. Tether is issued and redeemed upon market demand by our customers.”
Similarly, Circle CEO Jeremy Allaire also refused rumors regarding its connection with FTX and Alameda. The executive mentioned that Circle has no exposure to both firms rather than serving as a stablecoin provider to the mutual customers of FTX and Circle. Circle also highlighted that it has not taken loans or received FTX tokens as collateral.
Brian Armstrong, the CEO of crypto exchange Coinbase, also made it clear to its users that the firm has no material exposure to FTX or FTT. Armstrong also highlighted that the crypto exchange is not connected to Alameda Research regarding any holdings or loans. Brian said, “I think it’s important to reinforce what differentiates Coinbase in a moment like this. This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities, and mis-use of customer funds (lending user assets).”
Crypto Community Wants Complete Transparency
Despite the assurances provided by multiple executives, the crypto community is still not satisfied and expects a plunge soon. According to a Twitter user, no one would now trust these assurances, as FTX CEO Sam-Bankman Fried also said the same before its crisis. The community now wants consequences for this type of fraud as they said, “You want credibility: Find SBF and put him in a hole.”
After Binance’s acquisition of FTX, CEO Changpeng Zhao promised to fix the current situation and implement a way to build a complete transparent infrastructure of its reserves by deploying a Proof-of-Reserve mechanism using Merkle Trees. Besides CZ, other high-profile industry figures and experts have also shown support for the use of Proof-of-Reserves to provide consumers more trust and confidence about their crypto funds and to store them in the industry.