4.5 C
New York
Saturday, December 3, 2022

Binance agrees to deal to buy FTX’s non-U.S. operations

Binance agrees to deal to buy FTX's non-U.S. operations
© Reuters

 

FTT/USD
-76.61%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

 

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

 

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

FTT/USD
-76.71%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

 

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

 

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

FTT/USD
-76.59%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

 

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

 

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

FTT/USD
-76.59%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

 

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

 

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

By Geoffrey Smith

Investing.com — How are the mighty fallen.

FTX, one of the world’s biggest cryptocurrency exchanges and investment platforms, was rescued from bankruptcy on Tuesday by its biggest rival Binance, unable to stop a run by depositors. Bankman-Fried told staff in a Telegram message that FTX had hemorrhaged over $6 billion in the three days leading up to Tuesday morning.

Binance CEO Changpeng Zhao said the exchange has agreed in principle to buy the non-U.S. operations of Bahamas-based FTX, only hours after they had been forced to suspend client withdrawals, in what appeared to be a coda of several crypto investment platform collapses earlier in the year.

The news caps a mind-bending series of twists and turns over the last week, which came to a head when Binance – one of FTX’s original backers – triggered a run on FTX’s deposit base by pulling its own funds. It marks a staggering return of fortune for a company that in January raised new equity at a valuation of $32B.

“This afternoon, FTX asked for our help,” Zhao tweeted, noting “a significant liquidity crunch.”

“To protect users, we signed a non-binding LOI (letter of intent), intending to fully acquire http://FTX.com and help cover the liquidity crunch.”

He added that the acquisition will be subject to “a full” due diligence process. Given the newsflow of the last week, that process may be anything but straightforward, something reflected by the market reaction to the news. While FTX’s native token FTT rebounded sharply on the news, it quickly gave up some gains to trade at $17.7776 by 12:10 ET (17:10 GMT). That’s a drop of nearly 22% from Monday.

Zhao had implied in a series of tweets on Sunday that FTX had copied the ill-fated Celsius Network in covering up its financial weakness by inflating the value of its own native token through an affiliate, Alameda Research. Alameda’s CEO Caroline Ellison had rejected such suggestions, claiming that an Alameda balance sheet published some days earlier by Coindesk had misrepresented its true financial condition.

Bankman-Fried confirmed the agreement of “a strategic transaction” at the same time via Twitter, but omitted to mention anything about FTX.com being bought.

However the deal is styled, it appears to revolve around Binance – an early backer of FTX – agreeing to delay the withdrawal of its funding, which Zhao said totaled $2.1B. Nearly $600 million of that had been pulled at the weekend, according to third-party analytics of the blockchains used by the two exchanges. That had triggered an avalanche of withdrawals from smaller investors which gathered strength until FTX reportedly suspended operation earlier on Wednesday.

The deal, if consummated, will leave Bankman-Fried in possession of FTX’s ring-fenced U.S. operations while transferring its bigger non-U.S. operations to Binance.

That structure hints at a resolution of a simmering dispute over how the industry should be regulated in future – a dispute which some had speculated triggered Binance’s move on Sunday.

Bankman-Fried had in recent weeks endorsed draft regulations in the U.S. that appear likely to restrict the development of the decentralized finance applications which are at the heart of many crypto projects, not least Binance. Zhao had commented tartly on Sunday that “we won’t support people who lobby against other industry players behind their backs.”

While Zhao had described his weekend move as a “risk-management operation” with no deeper motive, Bankman-Fried had called it bad-faith scaremongering, saying “a competitor is coming after us with false rumors.”

Source: Investing.com

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

11,282FansLike
12,893FollowersFollow
744FollowersFollow
- Advertisement -

Latest Articles

Popular Articles