FTX Collapse: Major Companies Respond to the Community’s Concerns
As FTX continues to deal with liquidity issues, Tether, Circle, and Coinbase address the community’s concerns regarding their exposure to the platform
The liquidity crisis caused due to crypto exchange FTX and Alameda Research’s problems has prompted the crypto community to ask other companies to be more transparent and inform them of associated risks.
One of the most well-known stablecoins on the market Tether (USDT) as well as crypto exchange Circle were among those who were requested to provide assurances that the investors’ money is safe in their hands.
In a tweet authored by Wu Blockchain, a Chinese journalist also known as Colin Wu, asked Tether and Circle to disclose more of their financial relationship with FTX Alameda to let users know if it's a risk, adding “we are seeing a lot of assets move from Circle to FTX; there are also reports that Alameda is the second largest issuer of Tether.”
Responding to the tweet Paolo Ardoino, CTO of Tether and Bitfinex, wrote, “to be clear: Tether does not have any exposure to FTX or Alameda. 0. Null. Maybe it is time to look elsewhere. Sorry guys. Try again.”
CEO of Circle Jeremy Allaire likewise denied being exposed to FTX and Alameda Research.
“Circle has no material exposure to FTX and Alameda. FTX has been a customer of Circle Payment APIs for the past 18 months, providing card and ACH services for customer transactions. Circle's crypto payments beta product uses FTX and other exchanges, for BTC/ETH liquidity,” he tweeted.
Another prominent crypto figure Brian Armstrong, the CEO of crypto exchange Coinbase, also assured the community that his company is not susceptible to the financial problems faced by FTX and Alameda.
Despite these statements, some crypto community members are doubtful that they correspond to reality. Not least because FTX also used to have a good reputation.
Until recently it was the 4th largest exchange by volume. Its CEO Sam Bankman-Fried sponsored the Democratic Party and the platform acquired BlockFi.
The fresh crisis has therefore shaken the community and most likely affected Bitcoin price as well. Currently, the mother of all crypto is trading at just below $17,000 press time.
As a result, FTX reached out to Binance for help, signing a non-binding letter of intent.
The story is still unfolding.
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