Binance Plans to Acquire Competing Crypto Exchange FTX

Sam Bankman-Fried, founder of cryptocurrency exchange FTX, has become known as the rescue king of cryptocurrencies. Whenever a crypto company failed, Bankman-Fried, also known as SBF, would drop in with the money to keep them afloat.

Now SBF seems to be getting a bailout of its own.

On Tuesday, the world’s largest cryptocurrency exchange Binance announced it had signed a non-binding agreement to acquire FTX amid reports questioning the liquidity of SBF’s crypto exchange and its trading group, Alameda.

The acquisition is subject to the results of a due diligence investigation, said Binance founder Changpeng Zhao, who also visits CZ. And it should be noted that the tentatively planned acquisition is only for FTX.com‘s operations, which are responsible for the exchange’s non-US operations. Bankman-Fried runs a separate US crypto exchange known as FTX.US.

SBF and CZ traded barbs on Twitter this weekend, as CZ announced that Binance would liquidate any holdings of FTT, FTX’s proprietary cryptocurrency token, due to “recent disclosures”. This essentially caused a series of events that caused FTT token to crash in value and FTX experience $6 billion in user recordings over a 72-hour period.

ALSO SEE:

The Biggest Crypto Scam of 2022 (So Far)

The disclosures mentioned by CZ were mainly the result of reports from CoinDesk reporter Ian Allison and an anonymous crypto journalist writing the newsletter Dirty Bubble Media under the name of Mike Burgersberg. Both reports accessed Alameda’s balance sheets where there were apparent liquidity issues, with the majority of its assets held in FTX’s proprietary FTT token. The findings made Burgersberg question whether SBF’s empire was actually insolvent.

The anonymous Burgersberg has become notorious in crypto circles over the past year as one of the first to sound the alarm about crypto lending companies Celsius and Voyager, well before both companies went bankrupt. And apparently, based on CZ’s own Twitter likes, the Binance founder saw Burgersberg’s report before deciding to cash in on FTT as well.

According to reports, FTX was in talks six weeks ago to raise $1 billion at a valuation of $32 billion. The crypto exchange raised $400 million at an $8 billion valuation in January. Now it is being sold to its closest competitor in a fire sale.

As has become the norm in crypto, the news has created a knock-on effect across the industry; Bitcoin dropped below $17,500, the lowest value since 2020.

It’s hard to tell this story without mentioning that it takes place on Election Day in the US. SBF became a major donor to the Democratic Party in efforts to lobby for pro-crypto legislation. At one point he has committed a whopping $1 billion for elections heading into 2024. And while SBF spent a whopping $40 million on primarily Democratic campaigns through its Protect Our Future PAC, that is good short of the aforementioned $1 billion.

After today’s news, it seems plausible that Democrats shouldn’t count on the rest of SBF’s $1 billion coming in any time soon.

Add Comment