In a recent interview, the CEO, and chairman of Animoca Brands, Yat Siu responded to the FTX’s crash and the damage it has done to Bankman-Fried’s image and the overall centralized exchanges.
The investor shared his observation on the changing trends and opinions about custodial accounts and centralized exchanges that were once considered a safer option are no longer safe.
After FTX went downhill, WSJ reported that SBF allegedly transferred $16B of the users’ assets to Alameda Research in hopes to save the exchange; however, the firm ended up losing all of it in a span of two days. On the other hand, FTX had also paused withdrawals, preventing users to access their legally owned assets at will.
The idea of centralized exchange aligns well with traditional banks and financial services because even if the tokens are decentralized, the custody of accessing them only belongs to these CEXs who can drain them out without any consent from users.
“The centralized exchanges failed because they didn’t disclose their positions, and in this case, it appears there was an extreme leverage,” Siu said.”This is why centralized exchanges need to have more regulation.”
Compared to that, the decentralized platforms, exchanges, and marketplaces functioned as intended and remain unaffected because they have more transparency when it comes to financial statements and balance sheets.
The DeFi seems to be stronger because of the realization and conversations held in the space about the importance of ownership and custody over digital assets.
When referring to metaverse and blockchain gaming, he said that most adoption comes from these two industries and they are still bullish about their growth. The affected community is the professional traders who considered FTX as an authentic centralized exchange.
Now that the reputational damage FTX caused to Bankman-Fried has shaken the trader community massively; it will take a lot of time for SBF to regain his image, especially after the FTX insolvency. Nonetheless, the development side is still actively building.
With the conversations surrounding whether exchanges should be trusted at all, it’s a momentary time for the crypto community because this might result in a massive transition of interest towards DeFi and decentralized exchanges, instead of the CEXs.
