I’m sure you’re reading that headline and letting the week’s worth of crypto drama swirl around you, trying to make head or tails of what happened. Well, lucky for you, legend Shaan Puri put it in really easy terms in a tweet:
After you read that, take a look at the latest development:
Take a moment to let it in. Essentially, CZ, a billionaire who promoted fair practices, decides in a moment of pure rage against SBF (CEO of FTX) for what he considered tattling on him, to take him out by possibly causing a potentially devastating ripple effect across all of crypto by liquidating $2B worth of FTT (FTX’s fee token) and taking one of his rivals out. Although he never did it (or possibly never intended to from the beginning), people started to panic dumping FTT and pulling assets out of FTX in anticipation of such event. FTT price plummeted, FTX paused withdrawals, and for a rumored $1 buyout, CZ made an agreement to buy out SBF. Could SBF fought back? Yes. But it would have most assuredly crippled not only FTX, but possibly the market as a whole. Now, CZ claims due diligence shows he shouldn’t buy FTX?!
In my mind, this is the reason centralized exchanges and services should no longer be a primary vehicle for any crypto-related transactions (we still need their one function of converting fiat to crypto). All it takes is two young billionaire’s beef to crash a market, and everyone’s money with it. Look at all the revelations of Three Arrows or Celsius after they lost all of their customer’s money. Could regulation possibly prevent these kinds of things from happening? I’m not sure, but all I can remember in this moment is one of the reasons I became so attracted to the notion of crypto and Web3 is because of decentralized and permissionless services. We wouldn’t have a CZ, or an SBF, or Kwon Do make egotistical decisions in the heat of the moment that could cause a catastrophic downfall. Can DeFi protocols fail? Of course, but at least we are removing one point of failure, single human intervention. I’ve been fuming since this all started happening, and I think I’ve had it. I’ve only been using two CEX’s at the time of this article, but I think it’s time I made it zero. If at any point I do use one, it will be for fiat to crypto conversion, then moving it out to a private wallets ASAP. Readers, make the decision that’s best for you, but remember not only the crypto history lessons of the past, but everything we’ve seen so far in this crazy year of 2022.