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Exchanges are in the business of "liquifying". But, indeed, it can go wrong, with severe consequences.


Anything they hold a position in creates risk, the typical exchange business model is that they are fast enough and good enough that they can operate out of the excess through various arbitrage options but with extremely volatile assets the bottom can drop out pretty quickly and once you start borrowing and leveraging it can happen a lot faster still.

Essentially they are operating as banks sans regulatory oversight. It's a recipe for disaster.




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