Crypto exchange tokens have rebounded from their lows during the FTX bankruptcy and are now reaching new all-time highs, benefiting from the current bull market.
Binance’s native token, BNB, is currently trading at $352, which represents a 32% increase since November 2022 when FTX declared bankruptcy. This announcement caused panic across the crypto exchange ecosystem. Moreover, BNB is now trading higher than its previous highs in June 2023 when news of an investigation by the U.S. Department of Justice (DOJ) and a lawsuit by the U.S. Securities and Exchange Commission (SEC) against the exchange first emerged. While the DOJ settlement amounted to $4.3 billion, the SEC lawsuit is still ongoing.
Exchange tokens, which are issued by centralized entities, provide users with trading benefits on exchanges. They can also be used to pay for gas fees and engage in decentralized finance on blockchains created by centralized exchanges. Some exchange tokens even allow users to participate in the governance activities of the platform.
Meanwhile, the native token of OKX exchange, OKB, has experienced a significant gain of 132% from its FTX lows and has seen a total gain of 3,227% since its launch in May 2019. On January 25, the OKB token faced a major flash crash that wiped out almost $6.5 billion within minutes. However, it quickly recovered and reached new all-time highs. The flash crash was caused by a brief market sell-off, resulting in multiple leveraged liquidations within the OKX platform. To compensate affected users, the exchange conducted an airdrop.
Similarly, Bitget exchange’s BGB token has surged to all-time highs of $1.03, with a yearly gain of 159%. Last September, the exchange announced a $100 million fund called “EmpowerX” dedicated to blockchain, AI, and Web3 projects. Gracy Chen, managing director of Bitget, stated that the company expects more investments, mergers, and acquisitions in the coming months as the centralized exchange landscape evolves due to regulatory changes.
Not surprisingly, FTX’s FTT token has experienced a decline of over 90% compared to its pre-bankruptcy highs. Although the exchange plans to fully repay customers, excluding bankruptcy fees, it will not resume operations. According to bankruptcy lawyer Andy Dietderich, no investor is willing to commit the required capital to restart the offshore exchange, and there has been no buyer interested in acquiring the exchange as a going concern. The costs and risks associated with creating a viable exchange from the remaining assets left by Mr. Bankman-Fried were deemed too high.
In related news, Hong Kong crypto stocks have surged, and OKX has announced its plans to invest in L1s (Layer 1 solutions).