Fri, March 29

Binance Taking Over FTX – Biggest Acquisition of All Times

Binance Taking Over FTX – Biggest Acquisition of All Times Editors News
  • Binance becomes the rescuer of FTX.com from the “liquidity crunch.” 
  • The Binance-FTX acquisition is being closely monitored by US CFTC.

Binance CEO Changpeng Zhao confirmed the largest exchange’s move to “fully acquire” its rival FTX on Twitter on Tuesday, putting an end to all the speculations. Binance signing a non-binding letter of intent (LOI) with FTX.com marked the initiation of the bailout. 

Both these dominant parties have staged this crucial conversation about the surprising takeover on Twitter. For the crypto community, this acquisition is portrayed as the plot twist triggered by Binance CEO CZ.

FTX CEO SBF stated:

“Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.”

Rescued By Rival From Collapse

FTX CEO Sam Bankman Fried was once known as a rescuer of several crypto firms that were on the brink of bankruptcy. After the catastrophic Terra collapse, crypto firms like Celsius, Voyager Digital, and Three Arrows Capital (3AC) got trapped in a tragic insolvency crisis taking a terrific toll on the crypto market. Now FTX has entered this category.

Through FTX.us, FTX.com, and Alameda Research, SBF emerged as a prominent lender and investor to these crypto firms and expanded his crypto empire. Despite this, he failed to prevent FTX from falling into a liquidity crisis. 

FTX and its sister company Alameda Research were combatting insolvency in silence from the start. The crypto community became aware of it after CoinDesk unveiled the details of Alameda’s balance sheet recently. The whole empire of the firm was backed up majorly by FTX Token (FTT). 

Amid these panicking revelations, Binance initiated a major sell-off of $585M worth of FTT as a post-risk management measure. Following this, FTX Token price began crashing down. Notably, FTT slumped by more than 70% in the last 24h after Tuesday’s announcement on the acquisition. FTX token’s crash emerges as the Deja Vu of the Terra token’s collapse in May. 

Seemingly, FTX’s stance in this tough phase is similar to Celsius’s as it didn’t disclose its troubling situations early. In response to these scenarios, Binance CEO CZ highlighted two prominent lessons in a recent tweet for crypto firms to safeguard themselves from such crisis. 

By acquiring FTX – crypto exchange with the second largest trading volume, Binance becomes the dominant one in the sector. Speculations are high around the aftermath of this collapse as the global crypto market cap dropped down over 7% in the last 24h.

A perpetual learner who loves writing. Passionate about investing her time and zeal to explore the crypto world. Curiosity and creativity are her superpowers.