Did Binance just do what we think it did? The world\u2019s biggest cryptocurrency exchange by trading volume will likely buy one of its biggest competitors. The market was in turmoil, the players were in panic mode, but this news calmed the waters in a big way. What\u2019s next, though? Will Binance actually go through with the buyout? Is the deal final? And what does this story says about FTX\u2019s business model? Were they fractional-reserving their way to success?<\/p>\n
Let that sink in\u2026 pic.twitter.com\/Whj50bR2Ey<\/a><\/p>\n \u2014 wolf (@ImNotTheWolf) November 8, 2022<\/a><\/p>\n\n Let\u2019s analyze the official but not abundant information out there and try to reach our own conclusions.<\/p>\n After a whole morning of radio silence, the mind behind FTX and Alameda Research finally spoke. In a Twitter thread that will live for the ages, Sam Bankman-Fried was as vague as one can be. \u201cwe have come to an agreement on a strategic transaction with Binance for FTX.com,\u201d he tweeted. Then, he announced that \u201cour teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1.\u201d Wasn\u2019t that supposed to be the case from the beginning, though?\u00a0<\/p>\n 2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we\u2019ve asked Binance to come in. It may take a bit to settle etc. \u2014 we apologize for that.<\/p>\n \u2014 SBF (@SBF_FTX) November 8, 2022<\/a><\/p>\n\n Then, Bankman-Fried proceeded to effectively declare a winner. \u201cA *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry,\u201d he tweeted about his new boss. \u201cBinance 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.\u201d<\/p>\n 5) I know that there have been rumors in media of conflict between our two exchanges, however 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.<\/p>\n \u2014 SBF (@SBF_FTX) November 8, 2022<\/a><\/p>\n\n Is the deal set in stone, though? According to River\u2019s CEO Alexander Leishman<\/a>, \u201cThe DD on this deal is going to take forever. Bankruptcy still on the table if Binance decides they don\u2019t want to touch it after digging deeper.\u201d<\/p>\n\n BNB price chart on FTX | Source: BNB\/USD on TradingView.com<\/a><\/p>\n Allegedly, CZ knew what he was doing the whole time. After distancing himself from the concept of war and saying Binance was focused on building, today CZ can really show his true colors. \u201cThis afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,\u201d he humbly tweeted.\u00a0<\/p>\n There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.<\/p>\n \u2014 CZ Binance (@cz_binance) November 8, 2022<\/a><\/p>\n\n However, CZ is admitting to a liquidity crunch that shouldn\u2019t be there. And then, he clarifies that the deal isn\u2019t done yet. \u201cThere is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.\u201d<\/p>\n Analyzing the little data we have, DeFinace Capital\u2019s Arthur Ox<\/a> tweeted, \u201cGiven how little time it took to close this deal. It\u2019s likely Binance acquire FTX for nominal\/negligible amount and assume all the liabilities of FTX.\u201d And then, he gave advice, \u201cif I am previous round investor of FTX, I will probably start engaging litigation lawyer now.\u201d<\/p>\n The analysts are having a field day with this story.\u00a0 Dylan LeClair, who\u2019s been covering the ins and outs from day one, recently tweeted that the resolution \u201cconfirms that FTX is insolvent without a bailout from Binance\u201d and that \u201cAlameda was speculating with user funds.\u201d Those are hard accusations, but he\u2019s got some data to back them up.\u00a0<\/p>\n “Liquidity crunch”<\/p>\n I thought your deposits were backed 1:1?? <\/p>\n Or was your “proprietary trading desk” directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted. pic.twitter.com\/f7Y3LsYsqq<\/a><\/p>\n \u2014 Dylan LeClair (@DylanLeClair_) November 8, 2022<\/a><\/p>\n\n Questioning the liquidity crunch, LeClair asks, \u201cwas your \u201cproprietary trading desk\u201d directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted.\u201d Taking it to the next level, economist Tuur Demeester is<\/a> concerned with the implications, \u201cIf Binance buys FTX and hence takes over the claims of its depositors, it seems likely that Binance then would also become (or remain) a fractional reserve operation.\u201d<\/p>\n Featured Image by Candice Seplow<\/a> on Unsplash<\/a> | Charts by TradingView<\/a><\/p>","protected":false},"excerpt":{"rendered":" <\/p>\n Did Binance just do what we think it did? The world\u2019s biggest cryptocurrency exchange by trading volume will likely buy one of its biggest competitors. The market was in turmoil, the players were in panic mode, but this news calmed the waters in a big way. What\u2019s next, though? Will Binance actually go through with the buyout? Is the deal final? And what does this story says about FTX\u2019s business model? Were they fractional-reserving their way to success?<\/p>\n Let that sink in\u2026 pic.twitter.com\/Whj50bR2Ey<\/a><\/p>\n \u2014 wolf (@ImNotTheWolf) November 8, 2022<\/a><\/p>\n Let\u2019s analyze the official but not abundant information out there and try to reach our own conclusions.<\/p>\n After a whole morning of radio silence, the mind behind FTX and Alameda Research finally spoke. In a Twitter thread that will live for the ages, Sam Bankman-Fried was as vague as one can be. \u201cwe have come to an agreement on a strategic transaction with Binance for FTX.com,\u201d he tweeted. Then, he announced that \u201cour teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1.\u201d Wasn\u2019t that supposed to be the case from the beginning, though?\u00a0<\/p>\n 2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we\u2019ve asked Binance to come in. It may take a bit to settle etc. \u2014 we apologize for that.<\/p>\n \u2014 SBF (@SBF_FTX) November 8, 2022<\/a><\/p>\n Then, Bankman-Fried proceeded to effectively declare a winner. \u201cA *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry,\u201d he tweeted about his new boss. \u201cBinance 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.\u201d<\/p>\n 5) I know that there have been rumors in media of conflict between our two exchanges, however 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.<\/p>\n \u2014 SBF (@SBF_FTX) November 8, 2022<\/a><\/p>\n Is the deal set in stone, though? According to River\u2019s CEO Alexander Leishman<\/a>, \u201cThe DD on this deal is going to take forever. Bankruptcy still on the table if Binance decides they don\u2019t want to touch it after digging deeper.\u201d<\/p>\n BNB price chart on FTX | Source: BNB\/USD on TradingView.com<\/a><\/p>\n Allegedly, CZ knew what he was doing the whole time. After distancing himself from the concept of war and saying Binance was focused on building, today CZ can really show his true colors. \u201cThis afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,\u201d he humbly tweeted.\u00a0<\/p>\n There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.<\/p>\n \u2014 CZ Binance (@cz_binance) November 8, 2022<\/a><\/p>\n However, CZ is admitting to a liquidity crunch that shouldn\u2019t be there. And then, he clarifies that the deal isn\u2019t done yet. \u201cThere is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.\u201d<\/p>\n Analyzing the little data we have, DeFinace Capital\u2019s Arthur Ox<\/a> tweeted, \u201cGiven how little time it took to close this deal. It\u2019s likely Binance acquire FTX for nominal\/negligible amount and assume all the liabilities of FTX.\u201d And then, he gave advice, \u201cif I am previous round investor of FTX, I will probably start engaging litigation lawyer now.\u201d<\/p>\n The analysts are having a field day with this story.\u00a0 Dylan LeClair, who\u2019s been covering the ins and outs from day one, recently tweeted that the resolution \u201cconfirms that FTX is insolvent without a bailout from Binance\u201d and that \u201cAlameda was speculating with user funds.\u201d Those are hard accusations, but he\u2019s got some data to back them up.\u00a0<\/p>\n “Liquidity crunch”<\/p>\n I thought your deposits were backed 1:1?? <\/p>\n Or was your “proprietary trading desk” directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted. pic.twitter.com\/f7Y3LsYsqq<\/a><\/p>\n \u2014 Dylan LeClair (@DylanLeClair_) November 8, 2022<\/a><\/p>\n Questioning the liquidity crunch, LeClair asks, \u201cwas your \u201cproprietary trading desk\u201d directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted.\u201d Taking it to the next level, economist Tuur Demeester is<\/a> concerned with the implications, \u201cIf Binance buys FTX and hence takes over the claims of its depositors, it seems likely that Binance then would also become (or remain) a fractional reserve operation.\u201d<\/p>\n Featured Image by Candice Seplow<\/a> on Unsplash<\/a> | Charts by TradingView<\/a><\/p>\n <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_layout":"default_layout","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[82],"tags":[],"class_list":["post-11528","post","type-post","status-publish","format-standard","hentry","category-blockchain"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts\/11528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/comments?post=11528"}],"version-history":[{"count":0,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/posts\/11528\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/media?parent=11528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/categories?post=11528"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptocornercafe.com\/cafe\/wp-json\/wp\/v2\/tags?post=11528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Sam Bankman-Fried Bends The Knee<\/h2>\n
The Binance CEO Announces Its Win<\/h2>\n
The Future For Binance And FTX<\/h2>\n
Sam Bankman-Fried Bends The Knee<\/h2>\n
The Binance CEO Announces Its Win<\/h2>\n
The Future For Binance And FTX<\/h2>\n