Binance’s decision to purchase the FTX crypto exchange eventually put an end to the uncertainty that shrouded it for the last two days. Although the move shocked the space, it eventually brought to light the challenges that the FTX crypto exchange would have been facing for a while. Binance CEO Changpeng Zhao (aka CZ) has now taken to Twitter to give sage advice to crypto companies, shedding light on FTX’s challenges.
Hole In The Sheet
Before CZ’s tweet about Binance’s plans to sell off its FTT token holdings, no one had guessed that the FTX crypto exchange had any sort of challenges. Now, in hindsight, it does look like the exchange’s relationship with Alameda Research contributed in large part to its woes, and some unsafe business practices would eventually put it in the ground.
In the tweet, CZ talks about two lessons that crypto companies should learn from the FTX fiasco. The first one was the fact that FTX was using its own native token, FTT Token, as collateral. According to the Binance CEO, this should be a no-no for any crypto business as it puts them at a disadvantage when it comes to paying off those loans.
The next lesson was to completely avoid debt. Understandably, a lot of businesses need debt to operate and provide capital but CZ said crypto companies should not do this. He also added…
