Been saying it for ages: Exchange coins are a scam designed to avoid security law and raise capital for insiders. Nothing more.

It's been so obvious what has been going on, yet no one seemed to care. The whole purpose of exchange-issued coins like FTT, BNB, etc were to raise capital in an IPO-like way, but without being regulated and issuing securities. I mean, did no one ask themselves why it makes sense to give a discount in an exchange coin? There is no need. If you want to give people a discount, you just charge them less. Coinbase does this via volume. Doesn't matter what you pay in. Your fee is just lowered at the time of trading, not based on how you paid it.

This is how it works and how it always worked:

1. Create a large supply of coins that give people savings on trading fees of they pay in those coins.

2. Only distribute a percentage of those coins, retaining a lot.

3. Give a discount on fees such that the coins have some real value when compared to fiat fees.

4. Use that "created value" to create value on the balance sheet from the holdings of those coins.

5. Use that balance sheet, in-house coin stack as collateral (get loans in USD, USDT, USDC, ETH, whatever people will give you).

You've now essentially created securities whose value is directly related to trading activity, which is arguably directly related to revenues/cash flows. The value of the coins is related to the success of the business (just like securities would be!)

Congrats, you've created illegal securities and "raised capital" without giving away voting rights or dealing with actual regulation.

Congrats, your coin now failed and that balance sheet is worth shit. Now the margin calls come in, now the creditors come knocking. Now you are insolvent.