$740M in crypto recovered from FTX - Toon Finance solution to FTX collapse
How did FTX collapse and misuse billions in user funds
FTX is a cryptocurrency exchange that was founded in 2019. The company was based in Hong Kong and operates globally. FTX offers spot trading, margin trading, and derivatives trading of cryptocurrencies.
History of FTX
In November 2019, FTX raised $100 million in a Series A funding round led by investment firms including Andreessen Horowitz, Polychain Capital, and Paradigm. In May 2020, FTX raised an additional $8 million in a seed funding round led by investment firms including Paradigm, Breyer Capital, and Galaxy Digital Ventures.
In June 2020, FTX experienced a flash crash, which caused the value of Bitcoin to briefly plunge from around $9,700 to $8,600. The crash was caused by a sell order worth $130 million that was placed on the exchange. The order was eventually canceled, but not before it had caused major damage to the market. As a result of the flash crash, FTX lost around $10 million.
In November 2022, FTX filed for bankruptcy in the United States after losing $24 million to fraudsters. The company had been victim of a phishing attack in which hackers gained access to customer accounts and stole funds. FTX is currently in the process of liquidating its assets and has ceased all operations.
Apart from the alleged hacking, which is assumed to be an inside job by the executives of FTX to get money out of the exchange despite the users being unable to do so, FTX also has large problems with liquidity.
FTX used its users' money to fund its own activities, leading to an extreme lack of liquidity and a collapse of the exchange.
Toon Finance's Solution to the FTX Collapse
In response to the FTX collapse, Toon Finance has developed a solution that will prevent further theft from centralized cryptocurrency exchanges.
Centralized exchanges have a critical vulnerability not available from decentralized ones. This vulnerability can be found on most if not all centralized exchanges and it is largely impossible to ignore due to its inherent nature when it comes to centralized exchanges. Centralized exchanges have a problem with liquidity and security.
Centralized exchanges the likes of Binance and FTX allow themselves a certain degree of freedom when appropriating their users' funds. This means that even when everyone expects them to keep their users' funds, they use it instead.
This behavior is largely found on centralized exchanges like Binance and FTX where companies and their employees are able to use the users' funds for whatever they like instead of keeping it secure as they are supposed to.
Toon Finance's solution
The Toon Finance Protocol is an Ethereum blockchain-based platform that uses smart contracts and distributed ledger technology (DLT) to facilitate transaction tracking, dispute resolution, and secure asset storage. It utilizes atomic swaps between different cryptocurrencies and supports multiple currencies including Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), EOS, TRON, ADA, MATIC, and DOGE.
Toon Finance offers a different type of exchange where theft similar to FTX and can also happen to Binance, KuCoin, and Kraken, simply cannot happen. It is called a decentralized exchange.
A decentralized exchange promises to prevent theft and fraud by central exchanges that have the ability to misappropriate users' funds despite the fact that they are regulated.
Toon Finance proposes Toon Swap, Toon Swap is a decentralized exchange where users are able to securely trade and store their assets, free from the worry of theft or fraud.
Toon Swap offers a secure environment for trading digital currencies that is protected by the Ethereum blockchain protocol and smart contracts. The platform uses atomic swaps in order to exchange different cryptocurrencies quickly and safely.
In addition to this, Toon Swap also promises to provide an efficient mechanism for dispute resolution and asset storage. As such, it will be able to protect user funds from theft or misappropriation-by offering an immutable record of ownership that cannot be tampered with, as well as providing a dispute resolution process that can resolve any conflicts quickly.
How could the collapse of FTX have been prevented
FTX was one of the largest cryptocurrency exchanges in the world and its sudden collapse came as a shock to the crypto community. It came out of nowhere and was a genuine shock most definitely to its users that weren't able to withdraw their money.
With the users unable to take their funds from the centralized exchange, it was obvious that there were outpourings of emotions on social media, in particular, Twitter. The users were shocked that they were unable to do anything with their money that was supposed to still exist yet impossible to reach.
However, despite the shocking debacle of FTX's collapse, there are several factors that may have contributed to its demise. First, FTX was highly leveraged, meaning that it had borrowed a large sum of money to invest in cryptocurrencies. This made it very vulnerable to changes in the market.
With liquidity issues and irresponsible use of leverage, it was a clear sign that the company was being mismanaged. Borrowing a huge amount of money and investing a lot of it on something as volatile as cryptocurrency was quite irresponsible and downright baffling as large companies tend not to risk too much with liquidity involved especially when they could've made a lot of money still by doing safe investments.
Second, FTX was also heavily invested in Bitcoin, which fell sharply in value in early 2021 and further in mid 2022. This likely caused heavy losses for FTX, and may have forced it to sell off other assets to raise cash. Being heavily invested in Bitcoin, while a smart move, it is only under the right circumstance. Bitcoin may be a stable coin with a great performance when you look at it in cycles of years, it is still heavily volatile when it comes to its monthly performance.
Finally, FTX was subject to a number of lawsuits and regulatory investigations. Being a centralized exchange, while they enjoy a lot of revenue from fees and other products, they are also quite easy to regulate. Regulation is supposed to bring security to users and investors but as we can see with FTX and all the other centralized exchanges that committed fraud and scammed their users that even with heavy regulations from multiple governments, centralized exchanges remain problematic at best and a cesspool for scammers at worst.
These may have created uncertainty about the exchange's future, and discouraged users from trading on it. In hindsight, it is clear that the collapse of FTX was not inevitable. If the exchange had been better capitalized and diversified, it might have been able to weather the storm. As it stands, however, the collapse of FTX is a cautionary tale for other exchanges.
But even if it did everything right business wise, which it didn't, it still made unethical decisions when it comes to their users' funds, spending it on personal projects when they should have been keeping it safe.
It is ironic that a regulated centralized exchange like FTX and Binance, in fact, multiple of them like Mt. Gox, have all done unethical actions against their investors and it's the decentralized exchanges like Uniswap, Biswap, Pancake Swap, and Toon Swap, that aren't in any scrutiny because this vulnerability, critical one, that exists on centralized exchanges like Binance, FTX, and Kraken, simply does not exist with Toon Swap.
What makes Toon Swap a solution?
Toon Finance is an extreme DeFi or decentralized finance protocol, and Toon Swap is its decentralized exchange. As a DeFi protocol it allows users to create their own secure wallets and deposit funds without having to trust any third-parties, the transactions done on Toon Swap is both trustless and permissionless meaning that it is exponentially more secure and not subject to human intervention as transactions are done by smart contracts.
Toon Finance happens to be the largest and most watched ICO to date with Big Eyes Coin and IMPT trolling the DEX swap for the 2023 top Meme Coin. Cryptanalysts have been calling Toon Finance the next Shiba Inu coin but better with more utility and use around the project. Read more about the new Dex swap and how you can become an early investor.
The funds are also stored in smart contracts that can only be accessed by the user, making them impervious to hacks or malicious actors like what happened with FTX and other centralized exchanges like Binance, KuCoin, CoinBase, and Kraken.
Additionally, Toon Swap does not require centralized KYC (know your customer) processes which saves users from having to share their personal data in order to transfer funds. This prevents companies from using such information to take advantage of its users, this also prevents hackers from gathering information to choose their victims as it is more difficult to find a place to start.
Moreover, Toon Swap takes an additional step of security with its AML (anti money laundering) compliance ensuring that all transfers between wallets on the platform are legitimate and untainted by criminal activity as much as possible.
Toon Swap has a lot more to offer
Toon Finance's Toon Swap doesn't just stop with preventing hundreds of millions of dollars' worth of fraud from happening to investors and traders, Toon Finance's Toon Swap also has a lot of other features that make it unique as a decentralized exchange.
Toon Swap has Space Farming which allows users to use Toon Swap's native currency, the Toon Finance Token, to gain interest from staking and farming. This allows users to earn passive income on their tokens which can be reinvested back into the platform for greater rewards.
It also has a NFT platform that allows users to buy, sell, collect as well as participate in other activities with Non Fungible Tokens (NFTs). This is another great way for people to make money off of assets that are worth more than just money.
Finally, Toon Swap offers play to earn games and competitions that allows users to bet on outcomes of different games so they can win tons of tokens! This is something incredibly unique and is meant to encourage the movement of large amounts of tokens on the exchange.
Website: Toon Finance Website
Presale: Purchase Toon Finance Coin
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CoinMarketCap: Toon Finance CoinMarketCap.com
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