Following the recent news and stories making rounds of the collapse of cryptocurrency exchange, FTX, its feud with Binance and the meteorical downfall of its CEO’s net worth, users have been very sceptical about crypto and the people who have traded or stored their coins and tokens on the exchange are ever so eager to withdraw their funds, but to no avail.
But a few hours ago, FTX revealed that they’ll allow users to withdraw their funds, if only they buy some tokens from the TRON network. These tokens include Tron (TRX), JUST (JST), BitTorrent (BTT), SUN (SUN), and Huobi Token (HT).
What is FTX’s Deal With TRON All About?
Earlier, FTX revealed that they had reached an agreement with the TRON blockchain network to allow users holding their TRX, JST, HT, SUN, and BTT tokens to withdraw their funds. And this announcement further fueled speculations of TRON’s involvement in FTX’s fishy activities.
After the revelation, users observed that the TRON network tokens listed to be held for withdrawal were trading on FTX at prices higher than on other exchanges. For example, TRX is trading at $0.32 on FTX as against the $0.05 quoted on Binance. HT is also trading at $29.8, which is much higher than Huobi Global’s $6.35 quote for the token.
This means that for users to withdraw their funds from FTX, they’ll have to buy TRON network tokens at prices higher than those of other exchanges. The price difference percentage when compared with other exchanges are as follows: TRX – 540%, JST – 639%, BTT – 423%, SUN – 408%, and HT – 365%. This will result in a massive loss for users when they withdraw their funds and sell on other exchanges.
Also, TRON has reportedly injected only $13 million in funds into FTX, so there is no certainty that all users will be able to withdraw their funds if they accept FTX’s TRON-related terms and exorbitant price quotes.
What Does This Mean for FTX Users?
This FTX-TRON scheme could be FTX’s way out of the financial mess that they’ve found themselves in. Trading at higher price quotes means that FTX gets to buy the tokens at cheaper rates from other exchanges and sell them at higher rates to their users who want to withdraw, thereby profiting off the users via arbitrage. And as it also appears, remember that FTX CEO, Sam Bankman-Fried, has a company, Alameda Research, that engages in arbitrage as well.
The outcome of this would most likely be FTX resolving their over $4 billion balance error via their exorbitant price quotes, while there’s no certainty that users would actually be able to withdraw their funds.
FTX has already lost the confidence and trust of users and it could get worse as time goes on. Would you try to withdraw your FTX funds at a loss right now, with everything go on around the company?