Binance bailout of FTX aquisition whilst crypto prices plummet here is what you need to know 

Binance bailout of FTX aquisition whilst crypto prices plummet here is what you need to know 

November 10, 2022 Off By Mags Smith

The cryptosphere has had an eventful few weeks, from mudslinging between CEO’s, to a near record breaking merger, to one of the biggest CEX’s closing their doors. Here’s a play by play of everything as it unfolded. 

The two exchange giants have had a long history, with Binance even investing in FTX at the exchange’s inception. However, when you have two of the most prominent players in cryptocurrency going head-to-head, red dildos will fly. That is exactly what happened, forcing FTX to embarrassingly admit defeat on Tuesday and enter talks on a possible merger with their rival, Binance, in a bid to stabilize the market. But this was not to be and Binance would later withdraw from the deal, leaving FTX to file for bancrupcy.  

Shortly after Dirty Bubble Media alleged that Alameda Research another company owned by Sam Bankman-Fried (SBF), was in fact insolvent, Changpeng Zhao (CZ) tweeted that Binance would be selling roughly $2bn-worth of FTT tokens. 

With the demise of Luna fresh in every investors mind they rushed to liquidate their FTT holdings. SBF hit back against rumors that it did not hold enough assets to cover its investors’ holdings, but the announcement did little to stop the mass exodus of investors.  

On Tuesday morning, FTX stopped processing withdrawals and at 4pm, SBF announced the sale of the once great exchange. 

Whilst CZ confirmed the acquisition pending a due diligence audit on his own account. 

Shortly after, CZ sent an email to staff that he did not see the acquisition as a ‘win’ as this would lead to even more scrutiny around Exchanges, with regulators being likely to look at bringing in even more stringent protocols. 

As to what went wrong at FTX, an earlier tweet by CZ provides some insight into the demise of the Exchange “Never use a token you created as collateral . . . Don’t borrow if you run a crypto business. Don’t use capital ‘efficiently’. Have a large reserve.”

However, the deal was not meant to be, as on Wednesday the Exchange giant tweeted that it would not be buying FTX after conducting their due diligence audit siting “mishandled customer funds and alleged US agency investigations” as the reasons behind the sudden change of heart. 

In a series of tweets Binance said that it had hoped to “support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help” and that “outliers that misuse user funds will be weeded out by the free market” as regulatory frameworks are developed. 

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CategoryCrypto News
Tagsbankruptcy Binance cex crypto exchange ftx