TRON’s Justin Sun who is keeping an eye on the recent turn of events surrounding FTX threw his weight behind Binance’s CEO proposal of undertaking Merkle-tree proof-of-reserves to ensure “full transparency.”
Sun stated that his two crypto exchanges Poloniex and HuobiGlobal have completed their respective proof-of-reserves audits and would gladly take up the third one with CZ’s proposal.
The tweet by Tron’s founder was in reference to FTX’s troubling scenario that forced Binance to liquidate some of its holdings triggering a withdrawal halt by FTX.
Trouble around the health of FTT tokens has been brewing ever since Sam Bankman-Fried led Trading firm Alameda Research’s financials were made public.
The balance sheet showed that Alameda controls the largest amount of assets on SBF’s cryptocurrency exchange FTX, notably its FTT token, which offers holders a discount on trading costs on the exchange’s market.
While holding tokens is not rare, the worrying trend however is Alameda’s heavy dependency on its sister company and the lack of a stand-alone asset like fiat money or another cryptocurrency to back it up.
Investors were concerned that the arrival of massive sell orders could have a harmful effect on the price. The developing situation was also reminiscent of the crypto loan provider Celsius Network going insolvent under similar circumstances.
To make matter worse, Bankman-Fried was facing backlash from the industry for advocating regulatory strategies that would virtually destroy DeFi.
All these might have driven Zhao’s decision to pull out from FTX who also took a dig at the young billionaire, saying, ” We won’t support people who lobby against other industry players behind their backs.”
After an exchange of barbs between the two crypto founders, things came “full circle” as SBF likes to put it.
TRON Founder and Others Come Together To Follow The Merkle Tree Structure
Both FTX and SBF gave followers the assurance that their exchange was stable. Later FTX ultimately decided to engage in a “strategic transaction” with Binance in order to address a “liquidity crunch”
Soon after the takeover agreement that shocked many, Binance chief CZ again took to Twitter to announce the publication of “proof of reserves.”
According to CZ, blockchains use a “Merkle tree” as a data structure to record transaction data. Therefore, “Merkle-tree proof of reserves” could refer to a method that uses open blockchain data to demonstrate that exchange users’ crypto assets are secure.
Five cryptocurrency exchanges, in addition to Binance, have pledged to adhere to the Merkle tree structure to provide total transparency. These are Bitgate, Gate.io, Binance, TRON’s Justin Sun/Huobi, and OKX.
TRON blockchain founder Sun, who recently became Huobi’s global advisory board member, mentioned that Huobi had just wrapped up such an audit about a month back.