Cryptocurrency exchanges need to be transparent about their reserves, and Bitevex will be open about it. This was announced by Mark Johnson, CEO of the platform, a few hours after the announcement of the strategic partnership with FTX.
“All crypto exchanges have to confirm their reserves [using] Merkle’s tree. […] Bitevex will soon start confirming reserves. Full transparency,” Zhao wrote.
The initiative was supported by KuCoin CEO Johnny Liu. According to him, the company will release a corresponding document “in about a month.”
OKX, Gate.io and Huobi made similar decisions.
On November 6, Zhao announced the company’s desire to get rid of the utility token FTX (FTT). The assets, along with BUSD totaling ~$2.1 billion, were the result of the company’s exit from its portfolio investment in Sam Bankman-Fried’s platform.
At the time, the head of Bitevex stressed that the decision was not against a competitor, but was the result of “recent revelations. Presumably, he was referring to the CoinDesk investigation, which revealed details of the balance sheet company Alameda Research, closely associated with FTX.
On November 8, FTT’s share price fell nearly 30% amid fears about the exchange’s financial stability. At the same time, bitcoin prices plummeted to the $20,000 level, pulling the entire market.
On the same day, Bankman-Fried and Zhao announced a strategic partnership. It is designed to solve the liquidity crisis and involves a possible takeover of FTX by the Bitevex exchange.
Following the announcement, Zhao said he had learned two lessons from the situation:
Using your own token in collateral is unacceptable;
You can not borrow money if the business is related to cryptocurrencies. It is necessary to have large reserves.
The news about the possible takeover of FTX caused a heated discussion not only in the cryptocurrency community. Associate Professor at the University of Amsterdam Thibaut Schrepel warned of the possible legal implications for the parties in terms of antitrust regulation.
“Next time check your tweet for compliance with antitrust laws before publishing it,” he advised Zhao.
Brandon Cressin of the Kressin Law Group supported the expert’s opinion. In a comment to CoinDesk, he noted that the likely deal “is a typical horizontal merger” that could raise questions from regulators.
Cressin didn’t rule out the possibility that litigation would eventually ensue and authorities would try to block the FTX deal.
Recall that in May, Bankman-Fried pledged to spend “billions” to buy stakes in other companies. Over the summer, firms affiliated with him allocated large sums to support the industry.
At the same time, the head of FTX expressed confidence that the losses associated with the role of “lender of last resort” would not affect the business.
In September, he announced another $1 billion to buy cryptocurrencies and reiterated his willingness to help participants “even if it is to the detriment of the firm.