FTX and Binance, Cryptocurrency Leaders, Move to Curb High Risk Trades
Mr Bankman-Fried said on Sunday that only a small percentage of traders enjoy the maximum leverage available. He also argued that FTX had fewer liquidations than other exchanges and had long tried “to encourage responsible trading”.
Still, he predicted in an interview last week that some investors might not like any move to reduce leverage. “We would get an outcry from consumers if we got rid of it, and we would get really bad press,” he said. “But maybe it is the right thing to do.”
Mr Bankman-Fried also conceded that high leverage made it look like exchanges like his encouraged risky trades, although he said that was not a fair conclusion.
This perception is part of the reason regulators around the world are turning to Binance, the world’s largest cryptocurrency exchange. Since June alone, the stock market has come under increased scrutiny from financial regulators in Britain, the Cayman Islands, Hong Kong, Lithuania, Italy, Poland and Thailand, many of whom criticize its highly leveraged derivatives offerings or a new product line introduced this spring. which allows customers to buy versions of shares related to cryptocurrency like Tesla and Apple.
Mr. Zhao, the Sino-Canadian founder of Binance and developer with professional roots stretching back to Wall Street, said the extreme debt numbers were just a “marketing gimmick” and most traders don’t use them. not.
Timothy Massad, the former chairman of the Commodity Futures Trading Commission, which regulates derivatives in the United States, said he endorses FTX’s move and hopes other platforms will follow suit. Binance and FTX are two of the largest exchanges in the world, but others, including Phemex and BitMEX, still offered, at least according to their websites, 100 times the leverage on Sunday.
FTX’s move, Massad said, could be driven in part by FTX’s success last week in raising $ 900 million in venture capital, the most ever for a cryptocurrency exchange. Highly leveraged offerings on FTX are more of a reputation liability as Bankman-Fried seeks to expand the global reach of his platform, Massad said.
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