Checkmate: Binance Moves to Acquire FTX
Binance has announced it is set to acquire its rising rival, FTX. Binance CEO, Changpeng Zhao made this known in a tweet. “This afternoon, FTX asked for our help. There is a significant liquidity crunch,” the tweet began. FTX CEO, Sam Bankman-Fried also confirmed the news that has left the crypto community shocked.
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
FTX’s solvency has been in doubt since reports emerged that Alameda, FTX’s sister firm, only held FTT on its balance sheet. Following the report, Binance stated that it would be liquidating its FTT holdings. Although it noted that the liquidation was unrelated to Coindesk’s balance sheet report.
But this disclaimer was not sufficient to keep FTT from plummeting. The token crashed by 30% and has continued to decline even after the announcement of a potential acquisition. So far, FTT has lost over 80% of its value—falling from $22.1 to $5.20 as of press time.
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A Crypto Cold War: A Timeline of Events
When Sam Bankman-Fried launched FTX in 2019, Binance invested in the new exchange. The world’s largest crypto exchange stated that it would help FTX’s liquidity and products across the Binance ecosystem. However, in 2021, Binance exited FTX and sold its stake in the company. Binance received about $2.1 billion in BUSD and FTT tokens from the sale. It is these FTT tokens (23 million FTT) that Zhao threatened to dump following Coindesk’s big reveal.
This announcement did not sit well with Bankman-Fried. The 30-year-old CEO accused Zhao of targeting a competitor because of unfounded rumors. He went further to assure that the company’s assets were fine and clients’ assets were safe. Then he called for Binance-FTX collaboration.
Binance’s move to acquire FTX has caused a stir in the crypto community because of these antecedents. Some have called it a chess move, while others refer to it as a “gangster play.” The community has also pointed out that Zhao’s decision is similar to Musk’s Twitter acquisition.
No Break For SBF
Sam Bankman-Fried seems not to be catching any break as accusatory fingers keep pointing at his companies. Recently, BitDAO, one of the world’s largest DAO speculated that Alameda had dumped some of its BIT holdings. This was after BIT, BitDAO’s native token, dropped by 20%.
Recall that in November last year, BitDAO and Alameda agreed to exchange and hold their tokens for 3 years. The latter held 100m BIT tokens, while BitDAO held 3,362,315 FTT tokens.
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BUY NOWBitDAO speculated that Alameda had reneged on the agreement, causing BIT’s sharp drop. They asked Alameda to provide proof of funds—which the latter has since provided.
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