Binance To Acquire FTX
Changpeng Zhao, popularly referred to as “CZ”, CEO of the world’s largest exchange, Binance, announced today, Nov. 8, that his company would be acquiring rival Sam Bankman-Fried’s FTX for an undisclosed amount. According to Bankman-Fried on Twitter, the deal excludes the two cryptocurrency exchanges’ respective U.S. operations, FTX US and Binance US.
The news sent a shock to the crypto community. As of the time of writing this, the native token fo the crypto exchange is $5.81 and is currently down by 73.68% in the last 24 hours.
The Crypto Community Believes CZ Orchestrated The Whole Thing
A Twitter account that goes by the “autism capital” believes that “CZ just executed the most gangster play we’ve seen in Crypto, ever, period.” Twitter followers had been following the squabble between both titans and believes CZ’s tweets triggered the sell-off of FTT tokens.
CZ just executed the most gangster play we’ve seen in Crypto, ever, period. The BALLS on this man. Truly — bravo.
Also bravo to Sam to choose the correct option that protects customer assets, swallow his pride, and not burn everything down in an unnecessary fight.
WHAT A SHOW!
— Autism Capital 🧩 (@AutismCapital) November 8, 2022
To get the hang of what happened, Zhao stated in a Nov. 6 tweet that the decision to liquidate Binance’s position in the FTX token (FTT) was made due to “recent revelations that have come to light,” citing “post-exit risk management.”
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ 🔶 Binance (@cz_binance) November 6, 2022
FTX founder and CEO Sam “SBF” Bankman-Fried took to Twitter on Nov. 7 to claim that a competitor was spreading false rumours about the cryptocurrency exchange. He stated that FTX’s “assets are fine,” stating that the company had enough funds to cover all client holdings and does not invest client assets, even in treasuries. In the same thread, SBF called for collaboration with rival exchange Binance.
A little over a day after SBF made the earlier tweet, he and CZ took to Twitter to announce the acquisition of his exchange, FTX, making reference to a “liquidity crunch.” This “liquidity crunch” led to FTX’s insolvency. Thus, SBF sought a bailout from the rival exchange. It should be noted that the acquisition is subject to regulatory scrutiny and that Binance could pull out at any time. CZ cited that his exchange would be performing due diligence in the coming days.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ 🔶 Binance (@cz_binance) November 8, 2022
How Has This Affected The Market
Amidst the news of the takeover, there has been a massive selloff of FTT tokens, the native cryptocurrency of the exchange, plunging the crypto market to dip further. Earlier today, investors had taken out a large chunk of assets from the exchange making large bitcoin withdrawals reducing the amount of bitcoins from a little over 20,000 to just one.
As of the time of writing this, the native token fo the crypto exchange is $5.81 and is currently down by 73.68% in the last 24 hours. Binance’s native token, BNB, has risen by 8% from $326 to $355.
FTX is not the only exchange that has been bailed out in the past, but this recent potential acquisition by Binance leaves the crypto community to wonder just how powerful CZ is. Though the crypto market is currently experiencing a dip, we hope to see a slight pump in the coming days, depending on market sentiments.