CZ has denied that he intentionally created a liquidity disaster at FTX—”I spend my vitality constructing, not combating,” he tweeted on November 7—however Tim Mangnall, whose firm Capital Block has consulted for each Binance and FTX, says this was a “shrewd” enterprise manoeuvre by CZ, one which allowed him to “buy one of his biggest competitors for pennies on the dollar.”

All Hail CZ, King of Crypto

If it goes forward, the deal will additional reinforce Binance’s place because the world’s largest cryptocurrency trade. It was already bigger, by buying and selling quantity, than a clutch of its nearest rivals (Coinbase, Kraken, OKX, Bitfinex, Huobi, and FTX) mixed.

Not solely will the deal scale back the scale of the pool of exchanges in operation, however Binance may even maintain better management over the sorts of cash which can be extensively listed for buy. By the identical token, the affect of CZ, already one of the vital outstanding figures within the crypto world, may even be magnified in debates round coverage and regulation.

For the portion of the group that believes crypto ought to stand for decentralization, the merging of two of the world’s largest exchanges may even be trigger for concern. Decentralization is all concerning the even distribution of energy and eliminating single factors of failure, however the FTX takeover helps neither ambition.

The various, nonetheless, was to permit FTX to break down, which might have rocked crypto markets to the identical extent as the fall of Terra-Luna and Celsius. “If FTX did go insolvent, it would have had catastrophic effects,” says Mangnall. In spite of the rescue deal, the costs of bitcoin and ether have fallen by greater than 10 %, wiping out greater than $60 billion from the market.

The implosion of FTX may even elevate questions on what must be carried out to guard crypto house owners in future. One proposal, tabled by CZ, is that each one exchanges ought to present clear “proof of reserves”—in different phrases, clearly display they’ve sufficient money readily available to fund buyer withdrawals. In a tweet, he promised that Binance will take up this coverage “soon.”

Brian Armstrong, Coinbase CEO, expressed sympathy for FTX but additionally pointed to “risky business practices” and “conflicts of interest” that left the corporate uncovered—one thing that, presumably, transparency necessities would additionally treatment. Separately, Armstrong moved to dismiss issues that Coinbase may discover itself in an analogous liquidity crunch: “We hold all assets dollar for dollar,” he wrote on Twitter.

But others say this newest dance with catastrophe is proof that folks mustn’t retailer their wealth with exchanges, full cease. “What we’re seeing now is a reminder of the importance of crypto custody,” says Pascal Gauthier, CEO at Ledger, which makes wallets to permit individuals to handle their very own crypto. “You don’t own your crypto unless you use self-custody.”

Whatever the fallout, the acquisition marks the tip of an extended and storied rivalry between Binance and FTX—and hopefully, a disaster averted.