With regard to the things that have been disrupted through FTX’s collapse, one of them is Sam Bankman-Fried, CEO, FTX’s image in the cryptocurrency industry. Changpeng “CZ” Zhao, head, Binance Holdings Limited, made issuance of a series of tweets and comments recently for boosting his credentials as cryptocurrency’s standard-bearer through announcement of a fund for supporting cryptocurrency funds in crisis, as reported by Bloomberg.
According to Bloomberg, the announcement led to the triggering of a rebound in digital asset prices. It is believed that CZ disclosed plans to develop a global industry body for major cryptocurrency firms. Through other recent public comments, the emphasis has been given on re-establishment of trust in a sector which has faced scandals this year.
On the basis of information by Bloomberg, FTX’s bankruptcy has raised concerns around the legitimacy of cryptocurrency leaders and soundness of its fundamental structures, with Lawrence Summers, former Treasury secretary, making comparisons of the company with Enron Corporation. Reportedly, Zhao’s own role in the recent meltdown can lead to complications, regardless of the fact that FTX’s financial issues were likely long in the making. Through a November 6, 2022, tweet, Zhao mentioned about selling a large part of FTX’s native token FTT which led to further unsettlements in cryptocurrency markets.
“CZ announced he was dumping half a billion worth of FTT for everyone to hear on Twitter. That’s sort of like seeing someone at the bottom of a mountain and then kicking a snowball downhill. You know full well it’ll create an avalanche,” Max Gokhman, chief investment officer, AlphaTrAI, an asset manager, stated.
Moreover, Bloomberg noted that tensions between Zhao and Bankman-Fried was in place on full display for months prior to eruption of the crisis. With FTX in crisis and Bankman-Fried’s reputation, career and fortune considered to be in ruins, Zhao is considered as an important part of the cryptocurrency industry. It is believed that Binance was responsible for handling approximately half of global cryptocurrency trading volumes in the past week.
(With insights from Bloomberg)