Sequel to the ongoing turbulence within the crypto market, some leading centralized crypto exchanges like Coinbase and Kraken recorded intermittent service failure as per a post.
The temporary service interruption was associated with an increase in the volume of new user registrations, along with an increase in transactions. In the meantime, there appears to be relative stability in the services of the two affected platforms.
Recall that the centralized exchange FTX has been struggling with a liquidity crisis, which prompted its CEO, Sam Bankman-Fried (SBF), to strike a deal with Binance for temporary relief from the liquidity crisis.
Speaking on the temporary service timeout, Coinbase remarked that the exchange truly had network connection issues relating to its three platforms: Coinbase.com, Coinbase Pro, and Coinbase Prime.
On the other hand, Kraken centralized exchange fails to comment on the service outage complained about by its users. Although the exchange seized the aura to assure its users that it has proof-of-reserves audits.
The proof-of-reserves audits enable users to ascertain balances held on the exchange vis-a-vis backed assets. It is noteworthy that the abysmal proof-of-reserves of FTX.com led to its liquidity crisis.
CEX to Learn from FTX Liquidity Crisis
There is no mincing word that the current crisis rocking FTX.com exchange will serve as a lesson for a centralized crypto exchanges.
As a result of the occurrence, Binance CEO Changpeng Zhao identified two major lessons to be learned from this crisis; first, exchanges should not use a personally created token as collateral. Secondly, it is not advisable to borrow money to operate a cryptocurrency business.
Zhao further added that Binance had added $1 billion to its insurance fund in order to assuage the ongoing price fluctuations.
