After FTX Bankrupt, Crypto Exchange “Latah” Proves It Has Enough Money

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After the liquidity crisis that hit the crypto exchange FTX and caused it to go bankrupt, a crisis of trust was anticipated.

The collapse of FTX left many people in disbelief because FTX is one of the largest crypto exchanges in the US, and also the best growing.

In the midst of the crypto winter, FTX was able to reap an increase in revenue, a sign that investors are active in transacting on the platform.

However, like a meteor in broad daylight, some investors started to notice the collapse when Binance CEO Changpeng Zhao decided to liquidate ownership of the company's native FTX token, FTT, for "something."

After FTX Bankrupt

According to a Forbes report, FTX has officially filed for bankruptcy under US law on Friday (11/11/2022), along with the resignation of its CEO, Sam Backman-Fried.

FTX revealed that, the position of CEO is currently held by John Ray III, but Sam will continue to assist him in the transition and filing for bankruptcy.

A $32 billion liquidity crisis brought a hard hit to the crypto exchange, forcing the company to back down. It happened after the failure to get help from Binance.

It is known that FTX filed for bankruptcy for FTX.com, FTX US, Sam's trading firm Alameda Research and about 130 affiliated companies.

Not all, there are companies that are not included in the bankruptcy filing, namely FTX: LedgerX, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pty Ltd.

Thanks to this case, the crypto market once again fell into a bearish sentiment as investors worried about a domino effect like the case of the Terra LUNA collapse.

Crypto Exchange Clean Up 

The fall of crypto exchanges such as FTX is certainly feared to have an impact on the growth of a crisis of trust from the user's side.

The Block reports that some centralized crypto exchanges (CEXs) appear to be starting to be more transparent, offering proof-of-backup information at their disposal, even though it's not really mandatory.

Using a cryptographic tool called “Merkle Proof,” it will help present a summary of the funds from the exchanger's wallet and can be verified on-chain.

The lack of transparency at FTX and Sam Backman-Fried presents a crisis of confidence that needs to be anticipated. So, proving the number of reserves is a solution that some crypto exchanges feel is right for now.

The first step of proof-of-reservation was started by Binance, which reportedly will soon be followed by other crypto exchanges such as OKX, Bybit, KuCoin and others.

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