Recently, many cryptocurrency users lost a lot of money when the platform Celsius went bankrupt. Our team did some research to see what would happen to your assets on different types of crypto platforms in case they go under. Here’s what we found out.
After Celcius, it was FTX that went next, and it looks like multiple CEXs or centralized exchanges simply cannot keep the peoples’ money. In this case, there should be alternatives like decentralized exchanges since centralized ones are doing horrible and affecting the whole crypto industry.
See why CZ Binance leads defi investors to Toon Finance (TFT)
If you are new to the cryptocurrency industry, you may be wondering why Celsius- one of the biggest companies in crypto- went bankrupt. With a market cap of over 5.5 billion US dollars, Celsius is currently facing multiple allegations, the most interesting being that they ran a Ponzi scheme.
Going bankrupt is devastating for any company, but there are mitigation tactics and policies in place to protect your invested money or cash kept within the company. Do your research before investing large sums of money!
With the current trend with CEXs or centralized exchanges, it is obvious that it is no longer a question of if but a question of when a CEX will go bankrupt or face liquidity issues where the result is the same, all your money disappears.
Right now Binance is the best example of how to run a centralized exchange but with just a press of a button, CZ, owner of Binance, can choose to just disappear with all our money.
Bankruptcy and liquidity problems aren’t new but new centralized exchanges pop up like mushrooms after a rain despite the absolute fact that the inherent problem with human greed and liquidity requirements and assurances have not yet been solved by CEXs when decentralized exchanges like Toon Swap doesn’t have this problem.
What is Binance and what do they do?
Binance is one of the largest cryptocurrency exchanges in the world and they offer a wide range of services, such as trading, margin trading, lending, and they are even trying to remedy their problem as a CEX by building Binance DEX.
The problem with Binance DEX
The big and glaring problem with Binance DEX is that it is Binance and Binance makes money off of its CEX or central exchange aspect. So from this we know there is a conflict of interest that Binance has yet to address.
Is Binance DEX just a PR move after FTX? It is obvious if it is so since the timing is too good and trust should be in short supply these days.
Binance CEX vs DEX
Binance can go bankrupt in a few ways. One way is through fraudulent activities, like the Ponzi scheme that caused the bankruptcy of Celsius and FTX with Sam Bankman-Fried leading the scam.
Another way is through liquidity problems. When Binance doesn’t have enough cash to meet its obligations, it can go bankrupt similar to what happened with FTX. Finally, Binance can go bankrupt if it’s not able to repay its debts.
The ones mentioned above are ways Binance can go bankrupt in a normal fashion, but what if Binance decided to show its true colors and became malicious? Are there more ways to lose your tokens with Binance? The unfortunate truth of the matter is, there is an easy way, it’s to simply take your money and go.
We usually don’t want regulation in crypto since it is a decentralized space and thrives on that. But if there really isn’t a choice, it’s better to be completely backed and regulated by the government than being like FTX and Binance where they are only partially regulated with no guarantees to its customers.
Crypto exchanges are not like banks, they do not have the backing of a government. When things eventually fall like how they seem to be guaranteed with CEXs, they will not be able to provide the users’ money no matter what guarantees they give before the fact because their creditors will want to get paid first at the cost of the users.
Does Binance guarantee and insure your money?
To some extent, it is possible that you will receive some of your money due to Binance being a good example of how a centralized exchange should be run. But you need to remember that Binance’s creditors will get their take first. End users are always the last ones to get a piece if they ever get any.
Keep your money secure with decentralized exchanges DEX
The heart of the matter is this, CEXs have two inherent problems that cannot be removed or else they wouldn’t be called centralized exchange. One is that CEXs aggregate the money, it’s all in “one” location and under the control of a few people.
Imagine all that money under the thumb of someone you don’t know, how sure are you that they won’t risk jail when all the security in place is protected by someone from the inside where the threat is coming from in the first place!
The second inherent problem is liquidity. A central exchange must have liquidity so that if everyone on the platform jumped ship, they can return everyone’s money. And even if a company manages to ensure that they have enough assets to assure liquidity, what if someone simply spends the money like what happened with FTX?
Users Flock to Toon Finance here is why
DEXs are the answer simply because they do not have the problems that CEX’s have, they do not need liquidity and they are not governed by any single entity like banks. Instead they are decentralized, meaning that the users decide how and where the money is spent.
Decentralized exchanges are not custodians, they take a non-custodian role meaning that your money is not in their hands at any point of the transaction. This makes them much more secure than CEXs and therefore the best option to make sure that your money is safe.
Decentralized exchanges like Toon Swap lead the way to earnings and security
Toon Swap is a decentralized exchange that offers its users the best of both worlds. It offers them a safe and secure way to trade tokens with no liquidity problems, and made by Toon Finance with extra features that not only have no problems with liquidity and security, also comes with p2e games that will encourage token movement through betting.
Players and spectators can earn while having fun from betting their tokens on the outcome of a match or a coin toss. This makes it so that there is not just trading within the platform and provides more reason for traders to exchange tokens with each other.
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