- Justin Sun’s FTX plan has caused Tron's native token TRX to trade at $0.28 on FTX while its market value on Binance sits at $0.056.
- Following FTX and Justin Sun's agreement on a 1:1 TRX swap, the altcoin shot up by 4,126% on November 10.
- FTX users looking to swap would be getting 17 cents on the dollar, given the difference in prices on exchanges.
Justin Sun has been an avid supporter of Sam Bankman-Fried (SBF) and his FTX empire even after its collapse this week. The fall of FTX and its sister company, Alameda, led to the exchange halting its withdrawals. However, Sun's support is now being interestingly rewarded by FTX, even allowing users to withdraw their assets, but at a cost.
Justin and SBF working together for profits?
FTX announced on November 10 that the exchange reached an agreement with TRON to rescue the traders. This plan would allow the stranded exchange’s users to swap their assets at 1:1 value with TRON ecosystems assets like TRON (TRX), Bittorent (BTT), JUST (JST), Sun (SUN) and Huobi Token (HT).
As per the deal, Tron has deployed $13 million worth of assets on the exchange to allow users to swap their assets. This led to the value of the abovementioned tokens selling at a premium on FTX, with TRX rising by as much as 4,126% on November 10. While the asset's actual value is close to $0.056 on other exchanges, including Binance.
TRXUSD 1-day chart
This price is still 387% above the market value of the altcoin, which has created significant problems for traders. The pump came from the fact that since withdrawals have been paused on FTX, users will have to convert all their holdings into Tron ecosystem tokens in order to get them out.
But when users swap their TRX based on the ratio of 1:1, the value of their holdings decreases dramatically. This is because when they attempt to sell TRX on other exchanges, they will only get 17 cents on the dollar based on current prices.
Thus traders will suffer losses either way - even if they swap and sell their assets on other exchanges or don't and wait until FTX resumes withdrawals, which at the moment is unknown.
The only ones to profit in this situation are FTX, its sister company Alameda and Justin Sun. Swapping at the pumped price would generate profits from commission to the exchange and could also provide Sun with a cut. This would help FTX and Alameda reduce their liabilities.
Traders looking to arbitrage this opportunity by selling their TRX holding on FTX could gain profits, but since withdrawals remain paused, their profits would remain held on the exchange. Thus, it is best to sit back and wait to see where FTX goes from here since making no money is a far better option than losing all your money.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high
Bitcoin and Ethereum are approaching their key support levels, and a sustained close below these marks could lead to further declines.
TON set to launch synthetic Bitcoin to boost its DeFi solutions
TON revealed its plan on Thursday to launch a synthetic Bitcoin token on its blockchain, allowing users to trade, stake, and earn yield using BTC. Following the announcement, TON is down over 3%.
Maker Price Forecast: MKR could stage 40% rally
MakerDAO is up 2% on Thursday and could be set for a 40% rise in the coming weeks if it successfully maintains an extended move above the descending trendline of a falling wedge. On-chain data also supports the bullish outlook after a four-month-long decline.
USDT market cap crosses $120 billion as stablecoins continue their uptrend
The stablecoin market cap continued its uptrend in October, characterized by USDT reaching a $120 billion market cap, according to a CCData report on Thursday. This indicates that investors are preparing liquidity to fuel more demand.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.