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- The Biggest cryptocurrency exchange platform, Binance, has decided to delist all the leveraged tokens from its platform.
- Binance’s CEO Changpeng Zhao took to twitter to explain the reason. He stated that they are delisting the LTs because most of the people don’t understand the high risk products.
- CEO of FTX, Sam Bankman-Fried tweeted that Binance failed to educate the users about Leveraged Tokens.
The Biggest cryptocurrency exchange platform, Binance, has decided to delist all the leveraged tokens from its platform. The announcement caused frenzy among the holders who have been proposed with three options.
The three options, as posted on Twitter by Binance’s official account are to trade out the existing positions, to withdraw or to hold on and the equivalent value of the holdings will be credited to Binance US Dollar at the time of delisting.
Binance US Dollar (BUSD) is a stable crypto coin pegged to USD. BUSD has received approval from the New York State Department of Financial Services and will be available for direct purchase.
#Binance Will Delist All FTX Leveraged Tokens
From now until the delisting time you can:
– Trade out existing positions.
– Withdraw
– Continue holding and be credited the equivalent value of your holdings in BUSD at the time of delisting.
https://t.co/LQCbbr0x6J— Binance (@binance) March 28, 2020
LEVERAGED TOKENS
As stated on the FTX website, leveraged tokens are ERC20 tokens that have leveraged exposure to crypto. For instance, ETHBULL is a 3x long Ethereum token. For every 1% ETH goes up in a day, ETHBULL goes up 3% and for every 1% ETH goes down, ETHBULL goes down 3%. In short, leveraged tokens are very high risk products.
WHY IS BINANCE DELISTING LTs?
According to Joseph Young, on the major futures exchanges platforms like Binance Futures, FTX and BitMEX, users were able to trade cryptocurrencies such as Bitcoin and Ethereum with leverage of up to 125x. In accordance to these limits, a user with $100, could trade up to $12,500 in capital, essentially using debt to trade in a more risky environment.
The LTs add-on the benefits of a futures contract and high leverage trading. These allow users to purchase a leveraged version of a crypto asset. Subsequently, when the price goes up or down, the return is boosted by 3x leverage.
Binance’s CEO Changpeng Zhao took to twitter to explain the reason. He stated that they are delisting the LTs because most of the people don’t understand the high risk products. He asserted that user’s protection is the first and foremost motive of their organisation.
USER’S REACTIONS
A lot of people had things to say regarding this decision and a needle can’t be put on the direction of reactions. CEO of FTX, Sam Bankman-Fried tweeted that Binance failed to educate the users about Leveraged Tokens.
1) Binance de-listing LTs; didn't want to manage user education/support
2) FTX listing LT USDT pairs to compensate
3) You can either send LTs to FTX wallet or they'll turn into BUSD on BinanceMore LT info: https://t.co/6HiWhiccP7
— SBF (@SBF_FTX) March 28, 2020
