Industry insiders reacted quickly to Tuesday’s announcement of a proposed merger between FTX and Binance, two of the world’s largest cryptocurrency exchanges.
Changpeng Zhao, the co-founder and CEO of Binance, tweeted that the exchange had signed a letter of intent to fully acquire FTX.
The news comes after CoinDesk reported last week that FTT, the token that powers FTX, accounted for roughly 40% of Alameda Research’s $14.6 billion worth of assets.
FTT was trading at around $14.98 prior to the announcement that Binance had agreed to buy FTX; it quickly increased to $19.33 following the announcement. FTT is currently trading at $4.50.
In an email to MarketWatch, Daniel Keller, co-founder of Flux, a decentralized cloud infrastructure, said,
“I’m fearful that the decentralization that we have all strived for is at risk and this is a perfect example of why. “
“When we leave the future of DeFi and decentralization in the hands of a selected group of influential industry players, we are back to square one in legacy finance. I’m hoping this ongoing game of high leverage and user money risk will come to an end soon”.
Keller continued, “Another reason why decentralized finance needs to grow quickly is because in a bear market, many crypto-related projects start to falter and users’ assets are at risk.”
Some questioned whether this acquisition meant the end of cryptocurrencies. According to Pascal Gauthier, CEO, and chairman of Ledger, a hardware wallet for digital assets, cryptocurrency is here to stay. However, this acquisition puts security and centralized exchanges in the spotlight.
People “have good reason to worry about the security of their digital assets” if one of the largest centralized exchanges in the world runs into financial issues, he told MarketWatch.
According to Gauthier, users should exercise caution because there will be more significant digital assets in the future than there are today.
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