Lehman reappears in the currency circle, and the transparent mechanism of OKX reserves revives industry confidence
2022 is destined to be recorded in the history of the encryption industry. Just when most practitioners are looking forward to the approaching dawn, SBF, the former "savior" and the founder of FTX, which is known as the hope of the exchange, used it again this winter A heavy hammer tells everyone: the cold wind is just another calm before the blizzard, and I am just another dragon. Since Alameda, which was also founded by SBF, was accidentally kicked out of the “scandal” of its financial report on November 3, in just one week, FTX—one of the world’s leading encrypted asset exchanges—suddenly collapsed and thundered.
Let's review the chain of events along the timeline.
On Nov. 3, CoinDesk reported that Alameda Research, a hedge fund firm also founded by SBF, had a whopping $6.112 billion in FTT on its balance sheet. This means that Alameda's current assets are built on a foundation consisting mostly of tokens issued by sister companies,SBF is tantamount to printing paper with the left hand and putting it in the right hand to exchange money.
This move has not yet caused a real earthquake, until November 6, "the richest Chinese in the currency circle" and one of the early investors of FTX, CZ announced that he would clear all the FTT in his hands, with a total value of more than 500 million US dollars.Perhaps from this moment FTX's tragic end has been doomed.
The CEO of Alameda immediately responded that he intends to buy FTT from CZ at a price of $22 higher than the market price. SBF seems to be preparing for battle on Twitter. However, in just one day, SBF's acquisition offer to CZ was surprising.
This also confirms from the side that FTX is indeed facing an extremely serious liquidity shrinkage problem. A question mark has emerged in everyone's mind: SBF, which was still in the LUNA thunderstorm to save the market half a year ago,Where do you move users' money on FTX?
The development of the incident until CZ announced the acquisition of FTX seems to have drawn a sufficiently dramatic end, but reality is often more magical than drama. Within a few hours after the news of the acquisition was released and the price of FTT rose back above $20, Binance’s strong legal team and investment team seemed to have just returned from a 3-day collective vacation. The acquisition was suspended due to the so-called “antitrust investigation”. FTT Plunging down, FTX unfortunately crashed to the ground. I can't summarize the final outcome, I can only sayThis is the current currency circle.
Whether it is a drama-like acquisition storm or just looking at the FTX thunderstorm itself, it is enough to show that the current encrypted asset trading industry is still in the early stage of barbaric growth. Without the constraints of order, rules, frameworks and even laws, the giant whales seem to be Only by relying on morality and a sense of mission to self-monitor. And this farce will cause secondary damage to the industry due to the influence of both parties involved, which will be far greater than the LUNA-UST crash, 3AC thunderstorm and other events. In the end, it is very likely that a large number of investors will lose confidence in the encryption market, and the market It will continue in a vicious circle if it encounters cold again and even continuous thunderstorms.
After the acquisition turmoil was settled, another exchange giant, OKX, announced on its official Twitter that it would disclose its auditable merkle tree reserve certificate within 30 days. Although the FTX incident itself was not mentioned at all, it pointed out the misappropriation of user assets behind the incident.
Why do you say that? becauseProof of reserves means that a custody business holding cryptocurrencies should create a public certificate about its reserves and match it with the proof of user balance (liability), and theoretically proof of reserves + proof of liabilities = proof of solvency.OKX's move is tantamount to giving the entire industry a reassurance at a time when the trust crisis in the encryption industry is about to occur and the foundation of the centralized trading business is precarious. OKX has more than 20 million+ users around the world. Taking the centralized trading business as the cornerstone, OKX has grown into a comprehensive digital asset service provider spanning CEX and DEX business and an ecological builder of the encryption industry in five years.
Since the beginning of 2022, there have been frequent problems with trading user assets, whether it is the thunderstorms of institutions such as 3AC caused by the flash crash of LUNA-UST, or the additional issuance on the chain caused by the attack of BNB, and the 90% collapse of FTT caused by the FTX thunderstorm that happened in front of us. As mentioned above, unfortunately, the users involved in it lost a lot of assets due to risks other than transactions. The platform that provides asset trading services should have the obligation and inherent conditions to provide users with a safe, reliable trading scenario without facing unexpected risks.
OKX has indeed played a leading role as an industry benchmark in ensuring the security of user assets. In addition to the FTX event being the first to announce the announcement of the latest reserve certificate to reshape industry confidence, it has performed brilliantly since many major industry risk events.
At the beginning of the UST flash crash on May 8, when the LUNA price fell to 65USDT and the UST price briefly decoupled for the first time, OKX’s risk control system was triggered, and then the automatic redemption mechanism was activated to redeem all users’ assets from the chain Response to distribution, and make risk warnings through APP, email, and Twitter. This event involved tens of thousands of users. When the redemption arrived, the price of UST was 0.996USDT. It can be said that the loss of users is basically avoided.
In terms of user asset security management, OKX exchange adopts Google two-factor authentication (2-Factor) to ensure the security of user accounts. During the transaction process, it must also use multi-signature authorization to agree to the transaction. The trading platform itself also uses SSL website encryption credentials. It is safe and reliable to be able to effectively trade the process. As for user deposits, OKX Exchange stores 95% of user assets in offline cold wallets to prevent losses due to victimization or loopholes, and private key management also has industry-leading management regulations and strict rules and regulations.
Since the birth of Bitcoin, most encryption practitioners have always maintained a nonchalant attitude towards regulation. However, undeniable facts have proved that in terms of the currently irreplaceable centralized trading business, the supervision is still incomplete and insufficient, and the influence of industry organizations, exchanges, and asset giants on the industry and even the manipulation of transactions still exist. At the same time, due to the lack of industry models and industry infrastructure, how to ensure the security of user assets is an eternal problem that all encryption service providers need to solve. Every influential practitioner should have a sense of mission as an industry builder, maintain the basic rules and good order of the industry, instead of exhausting every "profit" in front of him.
