Experts noted that there will be no one to save the exchange from a possible collapse

​Nouriel Roubini and Peter Schiff call Binance the next one after FTX

11.11.2022 - 09:30


4 min

What’s new? American economist Nouriel Roubini and Peter Schiff, head of the brokerage firm Euro Pacific Capital, commented on the failed deal between crypto exchanges Binance and FTX. The latter is currently on the verge of bankruptcy. Thus, on November 8 on his Twitter account, Roubini wondered who, in case of collapse, will help Binance. Schiff, in turn, said that “competitors merge when industries are in decline.”

What else did the experts write? Roubini explained that FTX had previously bailed out other collapsed crypto companies, which he said used “Ponzi scams.” Now that FTX is crashing, it is being saved by Binance, Roubini said. According to the economist, “Crypto is Mother Of All Ponzi Schemes!”

Sam-Bankman Fried-led exchange FTX and trading company Alameda Research previously made a number of deals to fund or buy other crypto projects. One recent major deal was the purchase of the assets of bankrupt crypto broker Voyager Digital for $1,42 billion. However, Reuters reporters later reported that Bankman-Fried allocated more than $4 billion to bail out Alameda, including funds from FTX’s customers, as the firm suffered losses as a result of such deals.

Schiff, like Roubini, said that Binance could collapse, noting that there may not be any bailouts for the exchange. According to the expert, “the race to get out of BTC is on” on the market. Schiff stressed that Binance’s initiative to save FTX signals a deterioration of the digital asset market.

More details about the exchanges’ failed deal. A preliminary deal to take over FTX was made on November 8, but the very next day, following due diligence, Binance backed out of the deal, saying that FTX’s position left no option to help its customers. Bloomberg reported that FTX had an $8 billion shortfall on its balance sheet. Sources later told the WSJ that the exchange transferred $8 billion in customer deposits to Alameda to fund risky trades.

Binance CEO Changpeng Zhao said the collapse of FTX undermined the credibility of the entire industry and drew increased regulatory attention, which will further complicate the work of crypto companies. He also urged other exchanges to provide proof-of-reserves reports. Binance itself reported $69 billion in reserves two days later.

On November 10, Bankman-Fried apologized to the community, adding that the exchange will continue to operateonce the liquidity issues are resolved.

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