After hours of many rumors questioning the health of his finances, FTX announced that it will be acquired by Binance. Changpeng Zhao’s company has signed a non-binding letter of interest to buy out one of its main rivals to help cover its liquidity crisis.
For now, not many details about this “strategic transaction” have been mentioned. It has only been said that it will not impact FTX US, the subsidiary of the exchange of cryptocurrencies that works in the United States, which will continue to operate independently.
The news came to light after reports emerged that FTX had stopped withdrawals from its users due to liquidity problems. All amid rumors that the company’s finances Sam Bankman Fried They weren’t as healthy as they said.
But what is really striking is that it was Binance, through its CEO, that triggered the FTX crisis. And both platforms had become involved in a real war, with crossed accusations between their main managers.
Binance comes to the rescue of FTX
“Our teams are working to remove the withdrawal backlog as it is. This will end liquidity crunches – all assets will be hedged 1:1. This is one of the main reasons we have asked Binance to come in. It may take a little while to work out and we apologize for that,” Bankman-Fried said of the settlement.
But it didn’t stop there. “I know there have been rumors in the media of a conflict between our two exchanges. However, Binance has shown time and time again that they are committed to a more decentralized global economy as they work to improve the industry’s relationships with regulators. We are in the best hands,” added the FTX CEO.
Changpeng Zhao, meanwhile, clarified that Binance can withdraw from the agreement at any time. But he asked for patience and opened the umbrella before it rains, since he anticipated that the price of FTT, the native token of FTX, will be very volatile in the coming days.
What happened?
FTX has come under fire in recent days after rumors of possible financial problems surfaced. They skyrocketed after Binance CEO announced the liquidation of all your holdings in FTT. The determination, according to the businessman, was made due to “recent revelations that came to light”, without elaborating much more on the matter.
The revelations in question had to do with the situation of Alameda Research, another cryptocurrency firm owned by Bankman-Fried. In the past week, CoinDesk reported that a large portion of the company’s holdings, totaling nearly $15 billion, were in FTTs; situation that aroused an avalanche of criticism about the legitimacy of said balance.
Some analysts even accused the businessman of inflate the finances of their companies with their own tokens, which have no other support than their own supply and demand among the public. And the fear that the panorama of FTX was not different was not long in coming.
FTX tried to defend itself without success
The controversy that arose around the finances of FTX forced Sam Bankman-Fried to try to put cold cloths on the situation. Through his Twitter account public: “A competitor is harassing us with false rumors. FTX is doing well. Assets are doing well. FTX has enough to cover all customer holdings.”
In addition, he assured that the company does not invest the assets of the clients, that they were processing all the withdrawals -and that they would continue to do so-, and stressed that the platform is heavily regulated to protect its users. Bankman-Fried closed with a message to CZ, the CEO of Binance: “I would love it if we could work together for the ecosystem”.
The case highlighted the confrontation between two heavyweights in the world of cryptocurrencies. Recall that Binance invested in FTX at the time, but in 2021 it withdrew from the company. When he did, he received compensation equal to $2.1 billion in BUSD, his own stablecoin, and FTT.
“Liquidating our FTT is just post-exit risk management, learning from Luna. We gave support before, but we don’t want to make love after the divorce. We are not against anyone. But we will not support people who lobby other industry players behind their backs,” Changpeng Zhao tweeted.
From war to strategic alliance
Clearly, tempers were running high. In recent times, Sam Bankman-Fried had made a few enemies within the ecosystem. Especially after what he said about how companies in the sector they should accept the regulation without question. “Everyone should follow the OFAC sanctions lists (which, by the way, is already law),” he said recently, referring to the Office of Foreign Assets Control, which is part of the US Treasury Department.
The statements of the CEO of FTX were understood as a stab in the back to the rest of the actors in the world of cryptocurrencies. Although the companies in the sector were not opposed to the regulation, they did refuse to allow governments to block transactions or platforms at will. In addition, they accused him of attacking the concept of decentralized finance.
With doubts surrounding FTX growing rampant, users began withdrawing their funds from the platform, revealing that its much-touted liquidity was not. Thus, Sam Bankman-Fried, the entrepreneur who wanted to save the crypto ecosystem on his own, He had no choice but to go knock on Binance’s doorits main rival.
the token FTT has recovered part of its price after the announcement that Binance will buy FTX. This morning it fell as much as 35%, trading at a price of just over $14. At the time of writing this article it is at $18.71, but it is expected to continue with a lot of volatility for a few days.