Coinbase CEO Brian Armstrong said his exchange isn’t affected by the FTX fallout. He claimed the FTX “event” is a result of unsafe business strategies Coinbase doesn’t use. Armstrong expressed sympathy for everyone engaged with FTX, especially consumers who may have lost money. On-chain data reveals FTX seems to have ceased withdrawals on Tuesday.
Previously, FTX’s CEO tweeted “FTX is fine” and their withdrawal queue was returning to “reasonable levels.” However, the next day, the CEO revealed FTX was under a “liquidity crunch” from massive withdrawal requests and sought Binance’s help to secure consumer cash.
“This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities, and mis-use of customer funds [lending user assets]” said Armstrong.
Armstrong cleared that Coinbase doesn’t handle customer funds until ordered to do so. Notably, firms like Celsius, Voyager, and Three Arrows Capital, which lent customers’ funds to CeFi and DeFi institutions to make yield, collapsed after Terra’s crash in May.
Coinbase CEO calls for better regulations
Coinbase has no exposure to FTT, FTX, or its sibling company Alameda, Armstrong claimed.
He argues that the lack of clear U.S. regulation has pushed 95% of crypto trade overseas. These offshore corporations use “more opaque and risky business practices”. He added:
“We should continue to work with policy makers to create sensible regulation for centralized exchanges/custodians in each market [as we’ve been doing for some time], but then we need to see a level playing field enforced, which hasn’t happened to date”.
Notably, Coinbase CEO is likely to launch a cryptocurrency-focused documentary. He supports deFi as it aims to reduce risks with trusted third parties since all activity will be fair and transparent on-chain. However, in recent days the DeFi sector has been heavily hacked and exploited, costing consumers $3 billion this year. Due to anonymity, smart contract hackers can be hard to catch.
