- Binance’s potential acquisition of FTX took the crypto world totally by surprise
- FTX became insolvent following a collapse of the FTT price and a bank run
- What are the three key things we know so far about yesterday’s events?
The implosion of FTX yesterday, and the potential acquisition by Binance, left the crypto world reeling and sunk the Bitcoin price to $17,100, a price not seen for almost two years. The situation is still very fluid and there’s lots to take in, but here are the three biggest things we know for sure at this point after a crazy 24 hours.
Withdrawals Are Being Processed
When rumors of withdrawal issues began yesterday, a run on FTX ensued, with the exchange saying that any delays experienced were only due to a backlog caused by the run. FTX was looking for $1 billion yesterday to shore up its customer accounts, but by midday the rash of withdrawals allegedly left the exchange needing between $5-6 billion to cope with the demand.
FTX then went to Binance to ask for help with liquidity, which Binance provided pursuant to a takeover (see point 3), and Sam Bankman-Fried reassured customers that withdrawals, while lagging, were being processed and users funds were backed 1:1.
FTX Speculated with User Funds
Reading between the lines of the tweets and other information coming out of FTX and Alameda, it’s clear that FTX exchange was speculating with billions of dollars worth of user funds in order to increase its profits.
All but confirms that FTX is insolvent without a bailout from Binance.
Alameda was speculating with user funds. https://t.co/ziqtp9Qq48
— Dylan LeClair 🟠 (@DylanLeClair_) November 8, 2022
Many are seeing this as nothing but pure greed from a company that was already worth billions of dollars, greed that has come back to bite it in the biggest way possible, bankrupting iself in the process.
The Binance Deal is Not Definite
When Binance CEO Changpeng Zhao announced on Twitter that the exchange was investigating a purchase, the market responded with a $50 billion pump. However, it’s important to note that Binance is currently doing due diligence on FTX and it has made no definitive plans to take it over.
To this end, Coinbase CEO Brian Armstrong revealed that Coinbase wouldn’t be entering the race to buy FTX, telling Bloomberg that. “There’s reasons why that would not make sense…..I’m not at liberty to share the details right now…..it’ll all probably come out eventually.”
This casts immediate doubt over a Binance-FTX deal happening, which some don’t believe will be completed, potentially leading to a Lehman Brothers-style collapse.
Much More to Come
There is of course much more to come from this story, so stay tuned to FullyCrypto for the latest insight into the FTX/Alameda Affair.