Since the end of the past weekend, the crypto exchange FTX, its boss Sam Bankman-Fried and his company Alameda Research have found themselves in an uncomfortable situation. This seriously affected the stability of the billionaire’s business, posing a risk of the collapse of FTT, the token native of FTX. Analysts believe that if that had happened, there would have been a domino effect, which, as in the case of LUNA, would have plunged the market back into the red. What is the sequence of events?
For CZ, this acquisition aims to “protect users”
Late Tuesday afternoon, Changpeng Zhao (CZ), the founder of Binance, announcement the signing of an agreement to acquire FTX. This announcement comes after the publication of a tweet from Sam Bankman-Fried, in which he discussed the conclusion of a strategic agreement with Binance.
“This afternoon, FTX asked for our help. There is a major liquidity crisis. To protect users, we have signed a non-binding letter of intent (LOI), intending to fully acquire FTX and help cover the liquidity shortage. We will provide a full update on the matter in the coming days.”the Binance boss wrote.
Did we avoid a drama in the crypto industry?
This sudden agreement is the result of the panic that has arisen from the latest developments on the possible financial problems of FTX. Indeed, two days ago, a rumor swelled in the crypto community that Alameda Research, may be insolvent. This, due to its excessive exposure to very illiquid altcoins, including FTT, a native token of FTX.
In the process, Binance announced that it would liquidate all its positions on FTT, in order to protect itself from the risks of a possible repetition of the LUNA scenario. Additionally, CZ declined the offer to buy the FTTs from Alameda for $22 each.
A war of words had even started between the two heads of the crypto space. This, when CZ had asserted that he will not mate with people who conspire behind the backs of industry players. He was thus referring to Bankman-Fried’s troubled relationship with the political world. For his part, Bankman-Fried implicitly accused CZ of being the source of the rumor and of having orchestrated this scenario.
All’s well That ends well ?
This Binance update played a decisive role in FTX’s descent into hell. Between Monday and Tuesday afternoon, withdrawals were chained on FTX, many investors having panicked. At one point, on Twitter and Reddit, members of the crypto community reported a halt in withdrawals. This stop had even been compared to that of Celsius, when the crypto lender collapsed.
The FTX boss’ tweet seemed to calm investors down. But that of CZ had a more important role. We are now sure that the FTT ecosystem will not sink.
News of Binance’s takeover of FTX has certainly calmed the panic and should save client wallets. The arrival of the CZ crypto exchange will help cover the liquidity crisis that FTX is experiencing. If the deal is confirmed, it will increase Binance’s market share and make it an even bigger player in the crypto industry.
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