Blog

CRYPTO MARKET TUMBLES AS BINANCE BACKS OUT OF FTX MERGER LEAVING CRYPTO EXCHANGE ON THE BRINK OF COLLAPSE

CEO of Binance, CZ in a recent post clarified that he did not “plan” this and encouraged the community not to view the entire occurrence as a “win” for them.

FTX was initially nurtured by Binance. Today, it is being reported that it played a major role in the imminent vanquish of FTX. This makes a great tale. But CZ has assured the community that he had no idea of all that happened internally to FTX.

He went further to say that “FTX going down is not good for anyone in the industry” and then tried to bring the regulators into the picture, who already have their doubts about the industry and are closely monitoring the situation.

With Sam Bankman-Fried losing his credibility, and the exchange’s fall from grace, let’s look at the timeline of how the events unfolded.

Changpeng “CZ” Zhao, a Chinese Canadian who moved to Vancouver in the late 1980s, founded the cryptocurrency exchange Binance in 2017.

In the same year, Alameda Research a private trading and venture capital firm focused on digital assets was launched by SBF.

Two years later, Bankman-Fried co-founded – FTX – along with another MIT alum Gary Wang. Binance invested an undisclosed amount to the then derivatives exchange while Alameda incubates FTX.

In 2021, after FTX secured $900 million in funding, Binance announced selling its share of FTX.

FTX then emerged as one of the biggest contenders with a significant market share of centralized crypto exchanges.

SBF’s popularity continued to soar amidst the raging bull market. The MIT physics grad was even dubbed “the next Warren Buffett.”

Aftermath the Terra crash, Bankman-Fried’s position as bailout “messiah” was further elevated after helping struggling lender BlockFi. As he also announced buying Canadian crypto asset trading company Bitvo in addition to the assets of Voyager Digital.

In August 2022, the first signs of crack began to appear when the co-CEO of Alameda Sam Trabucco stepped down from his position.

As FTX grew bigger and continued to expand, SBF increased participation in United States’ regulation. So much so that the executive was one of the largest donors in crypto only second to the largest donor US President Joe Biden. According to the Data gathered, it suggests he had spent almost $40 million primarily backing Democrats during this current political cycle.

By the next month September, FTX.US – the US arm of FTX – was under investigation by the Texas State Securities Board for its alleged involvement in unregistered securities offerings.
And after a draft of the Digital Commodities Consumer Protection Act (DCCPA) was leaked to the public, SBF’s popularity suffered a hit. The executive championed the bill, but it was rejected by the community. As many experts considered DCCPA to be a “DeFi Killer.”

In November, the balance sheet of Alameda’s was largely made of FTX’s native FTT token surfaces. The trading firm’s holdings were found to be more than $3 billion worth of FTT on its balance sheet.

Amidst concerns about insolvency, Binance CEO confirmed the transfer of $584 million worth of FTT. He went further to reveal that the move was intentional and was part of a liquidation process. Without mentioning FTX, CZ said he won’t “support people who lobby against other industry players behind their backs,” perhaps making remarks on FTX’s close relationship with the regulators.

CEO at Alameda Research, Caroline Ellison, offered CZ to purchase FTT back at $22 and claimed that the firm had $10 billion in assets which was reported in the leaked balance sheet.

However, Ellison’s assurance failed to dispel the ongoing FUD. As a result of that, investors’ withdrawal of FTT intensified and the sell-off crashed the price of the token by over 80%.

As soon as this happened, Alameda began to offload Solana (SOL) to defend FTT’s price. SBF then took Twitter to clarify that the exchange and assets were fine, however, more panic was created as FTX paused certain withdrawals.
Some hours later, the executive announced that FTX would be acquired by Binance, and this was later confirmed by CZ.

On November 9th, CoinDesk reported that after reviewing FTX’s finances, Binance strongly considered pulling out of the proposed acquisition.

The report was confirmed by Binance and CZ. And since then, new reports have emerged claiming that the entire legal team of FTX quit, the exchange needs $8 billion to stay afloat and that Justin Sun could become its savior.

Featured Image Source: economictimes.indiatimes.com

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha Plus loading...