What happened here with Binance and FTX Commotion?

Over the past few days there has been a turmoil in the crypto market after reports had emerged that FTX has some “insolvent” issues and how Binance used a few moves against it. 

Here is a summary of what happened here, as documented by Cointelegraph.

Binance CEO Changpeng Zhao would tweet on Nov. 6th that the exchange will liquidate its entire FTT holding over the news. He later confirmed a Nov. 5th transfer for 23 million FTT ( $584.5 million) calling it a “just post-exit risk management ” citing a lesson learned from the collapse of Terra’s Luna Classic earlier this year.  Zhao claimed that due to its FTX disposal last year, Binance had around $2.1 billion equal in Binance USD (BUSD) and FTT, although he did not elaborate on Binance's current FTT holdings. The token sales, he continued, will be conducted in a fashion that "minimizes market impact," and he anticipated that they would take "a few months to complete."

The following day on Nov. 7th, panic ensued as FTX users started to withdraw funds from the exchange over the fear of its collapse with some urging others to remove their funds from it effective immediately. Later, CEO of FTX Sam Bankman-Fried put out a tweet storm stating the exchange and the assets are fine and said a competitor “is trying to go after us with false rumors”, which looked like a jab at Binance.

FTX Token price would start to perform badly, in just a few hours, the FTT cost dropped by almost 30%, from $22 to about $15.40. The potential for FTX failure also had an impact on the price of Bitcoin.

Then on Nov. 8th, CZ would announce on Twitter that FTX had “come to an agreement on a strategic transaction” with Binance for the exchange to help cover what he called a “liquidity crunch.” The key justification given by FTX for asking Binance to intervene, he continued, "all assets will be covered 1:1." Shortly after, Zhao said that Binance had signed a non-binding letter of intent to purchase the exchange, but added that they maintained the right to "back out of the agreement at any time."

And they did, as on Nov, 9th CZ backed out from acquisition by citing  “[mishandling] of customer funds and alleged US agency investigations” while adding “the issues are beyond our control or ability to help.”

FTX on the other hand was trying to sort out things, Bankman-Fried deleted that accusatory tweet and assured the user assets are “fine”. The websites for FTX Ventures and Alameda were taken offline on November 9, while unverified rumors circulated that FTX's legal and compliance employees departed on November 8.

According to new reports, Bankman-Fried put out a request to investors seeking $8 billion in emergency funding to address the "liquidity crunch" brought on by user withdrawals during the previous several days. Bankman-Fried wanted to collect up to $4 billion from investors and cover the remaining amount with debt financing and even even his own wealth to make sure clients were satisfied.

The websites were online two hours later but there was now this message: “FTX is currently unable to process withdrawals. We strongly advise against depositing.” Later at the time of writing this another message is displayed: "All onboarding of new clients has been suspended until further notice."

Additionally, the notice was further confirmed in a post that was pinned on FTX's official Telegram channel by the channel's administrator, who stated that withdrawals of crypto and fiat were impacted and that they "had no idea" when it would be back online. They also stated that they "have a lack of information at this point."

As for Almeda Research there was some initial damage control by its CEO Caroline Ellison who later said they were interested in purchasing the FTT sales at $22 per share, which was rejected by CZ. FTT token at the time of writing is at $2.71 a total 40.47% down from its highest at $26.47 a month ago.

So, as of now FTX remains in a bad situation while things are seemingly fine for Binance. 

#ftx #binance #cryptoexchange #cryptomarket #cryptostan #thecryptocountry #FTT #ChanpengZhaoCZ #SamBankmanFried