Many people think that when Wall Street enters, crypto will become less scammy and risky... but the truth is, do you know how traditional financial companies make money?
1- Supporting and promoting IPO companies to go public, then charging fees
2- Charging transaction fees and spreads from traders
3- Allowing users to collateralize assets to borrow money and charging interest
4- Payment for Order Flow, which means sending trade orders to the market maker that pays the highest fees
5- Participating in brokerage, market making, or distributing high-risk assets like junk bonds and penny stocks, which are worthless stocks
These activities are all legal, but that doesn’t mean there are no risks or conflicts of interest, and generally, the operating model of crypto exchanges isn’t much different.
Everyone knows Sam Bankman-Fried of FTX, but many have forgotten Bernie Madoff, who was the Chairman of NASDAQ and behind one of the largest frauds in history, with a scale of about 65 billion USD, exposed in 2008.
1- Supporting and promoting IPO companies to go public, then charging fees
2- Charging transaction fees and spreads from traders
3- Allowing users to collateralize assets to borrow money and charging interest
4- Payment for Order Flow, which means sending trade orders to the market maker that pays the highest fees
5- Participating in brokerage, market making, or distributing high-risk assets like junk bonds and penny stocks, which are worthless stocks
These activities are all legal, but that doesn’t mean there are no risks or conflicts of interest, and generally, the operating model of crypto exchanges isn’t much different.
Everyone knows Sam Bankman-Fried of FTX, but many have forgotten Bernie Madoff, who was the Chairman of NASDAQ and behind one of the largest frauds in history, with a scale of about 65 billion USD, exposed in 2008.