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TRX up over 600% after Justin Sun’s deal with FTX

Tron’s native token TRX has seen significant upside on the FTX exchange since announcing a potential deal that would allow users to withdraw funds. This deal is one of the few that has come into effect since FTX began experiencing problems and it seems that users are already taking advantage of it. However, all is not rosy as users are starting to notice the downside of this.

TRX price explodes on FTX

The TRX token is already up more than 500% on the FTX crypto exchange over the last week. Tron founder Justin Sun had apparently worked out an agreement with the ailing exchange that would allow users to exchange their cryptos currently stuck on the platform for TRX tokens and then withdraw them.

This would obviously allow users to trade digital assets like Bitcoin, Ethereum, etc. into TRX and then withdraw them, allowing them to withdraw previously stuck funds from FTX. It has naturally become a popular option for FTX users, causing the price of the digital asset to skyrocket on the exchange.

In just 24 hours after the announcement, the price of TRX had already increased significantly. While the token’s price remained relatively low on all other exchanges, it traded to a high of $0.43 on the FTX exchange. Compared to the $0.05 price mark found on all other exchanges, it is trading at a premium of 600% on FTX.

TRX price spikes on FTX | Source: TRXUSD on TradingView.com

Since the token made this new high on the platform, there has been some price volatility. However, the price still remains high $0.43 at the time of writing, with the trading volume already exceeding $630 million within 24 hours.

Not a good deal

At first it looked like a good idea to convert digital assets to TRX on the FTX exchange to withdraw funds, but that only lasted as long as prices on the exchange correlated with the broader crypto market. As TRX’s price inflated on the FTX exchange, the value users received when exchanging their tokens quickly plummeted.

Since TRX is 500% above the market price on FTX, this means that users of the exchange would only get about 20 cents on the dollar when trading. This is because after subtracting TRX from FTX, they would still have to exchange tokens at current market prices.

To put this in perspective, let’s say someone has $10,000 worth of Bitcoin and exchanges it into TRX at $0.43 (current prices), they would receive about 38,570 TRX. If they pull out and move to other exchanges to sell, they would only have $1,162 after the sale if they take the current price on Coinmarketcap of $0.05. This equates to approximately 12 cents on the dollar.

Meanwhile, Tron is having the bank trick the bank into buying these digital assets cheap as they are the only ones allowed to transfer TRX to FTX. At the current rate, they will be making millions of dollars in profits, which will likely give FTX a decent share of the proceeds.

This shows that in times like these, it is always the end users who are being fooled. Even seemingly “helpful” deals turn out to be just another way to exploit users who are already in a vulnerable position from the stock market collapse.

Featured image from Medium, chart from TradingView.com

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