The thing that I always wondered about with FTX (and Binance frankly) is how did they get so big so quickly. What did they have that caused so many people to use _their_ exchange. This is still unexplained and was a major red flag. Usually to grow that big takes many years. Just look at Coinbase.
I don't know about FTX, but Binance has been shady from the very beginning. They got large quickly because they listed all kinds of **coins, had negative trading fee promotions, and in general did lots of shady growth hacking marketing tactics and partnerships. If you wanted to gamble altcoins, those would be on Binance, but not listed on Coinbase. That was many years ago when they started out of course. I'm curious where they are today. In my mind, the shady image of Binance hasn't changed, but maybe they got lucky with their investments and are actually fully backed and profitable now. Who knows...
Coinbase used to be US-only, and is still very US-centric. Binance and FTX are international. They only opened US exchanges later, but they are separate, and tiny compared to their international footprint.
I'm also curious how FTX got so big. When they started, the market seemed saturated with exchanges already, and they didn't really have differentation.
I guess it goes to show even in the face of all the scams there remains a massive appetite for [seemingly] legit markets to buy/sell coins. Boggles my mind these idiots can't simply be satisfied to run a profitable, lawful operation.
Chances are those satisfied people exist, but you never hear of them because they never left bootstrapping territory. Honesty, modesty and getting investment, you can pick at most two. Because telling a would-be investor "I'll be happy breaking even" is equivalent to openly announcing that you'll steal their money.
I think the issue was they were creating the market for these *coins.
The reason people wanted to gamble in these alt coins is the wild returns. These returns would not have been possible if these business had operated as a lawful like gambling operation.
Still get emails from Binance constantly: "Earn 3.6%/3.9%/4.1% when you stake ... FTM/ONE/ROSE". Just scrolling down, they offered 15% on DOT back in August!
They offered this because it’s the staking reward the Polkadot network rewards for staking your coins. Binance just offers you to stake with them and in turn gives you part of the rewards. The 15% are paid in DOT though, so your dollar return is dependent on DOTs performance.
An interesting observation: first people get used to trusting e.g. Coinbase, in the slow, organic way of trust to grow, then they see a similar company, the brain does that category drawer game and suddenly the new company gets trust by similarity. Certainly not the full amount but a much better start than the first one had. I wonder if there's already a term for that? What's even the field where these observations would be collected?
Binance was publishing fake volume numbers (basically a sine wave chart) up until ~2018. They faked it until they made it.
The only reputable exchanges are KYC/western based Coinbase, Kraken, Gemini, and perhaps some of the smaller US based companies.
Honorable mention to Bitmex, which was truly financially innovative (basically what FTX and other crypto futures exchanges tried to copy) and admitted exactly what it was (a place to trade with irresponsible leverage). Their only mistake was not trying that hard to prevent US nationals from yoloing on their site.
And a week ago you would have included FTX in that KYC "western" list esp since they had so many big "western" investors and Washington's ears including the SEC.
Not to mention Bitcoin and crypto were created out of the failures of the trusted KYC "western" banking standards of 2008.
You are literally repeating blind trust mantra based on region bias that has just failed again this week.
Crypto is about avoiding the need to trust any of these entities, if it still hasn't enabled that maybe it isn't mature yet as an industry.
CeFi or not.
FTX.US is based in the US and that didn't solve the fundamental issue of manhandling funds.
KYC didn't stop anything, the fraud was internal.
If proof of reserves was enough for you then Binance is on the same level as Kraken. It does sound a little hypocritical if you hold them to different standards if that was your issue.
From my understanding Binance took a more DeFi route while FTX/Coinbase were pushing for CeFi.
CZ doesn't inspire trust, but I don't think he is seeking it either. Unlike say SBF who had contracts where people HAD to praise him(YouTubers) and cultivated a persona of "honesty" - while ruthless destroying other projects, you are seeing just how many now and time will only reveal more.
If I wanted crypto to act like a bank, I'll just open another bank account.
I rather they build products that make life easier for others, than all the traditional derivative junk or yield scams that happened in recent years.
There is too much filth in the current system that exploited a good idea, let the tide recede and expose those who were swimming without pants.
Nobody is saying KYC is a guarantee, but whether it's a coincidence or not, the exchanges I consider to be safest are all KYC and based in jurisdictions where fraud == prison.
Back in 2017 when there was an new coin spiking every day Binance was by far the easiest place to sign up and trade. Everywhere else had either much stricter KYC or a much worse reputation.
It’s likely Binance was so much easier because they were ignoring KYC laws, but I’m not a lawyer.
My guess is they managed to get market makers in there due to connections. This creates liquidity which is a virtuous cycle. They also had early attention from being a top trader on bitmex iirc.
Fair bit of luck needed as well since there's hundreds of exchanges launched at around that time.
There's no explanation that doesn't require luck, but there's also no explanation that doesn't require having the prerequisites of liquidity and marketing.
Close ties to the Biden admin. Sams parents are very close and worked in both the Obama and Clinton admins. Question is will the DNC return the 40 plus million given to them from San Bankman?
