Since the end of last weekend, cryptocurrency exchange FTX, its boss Sam Bankman-Fried and his firm Alameda Research have found themselves in an awkward situation. This severely affected the stability of the billionaire’s business, jeopardizing the collapse of FTT, the token native to FTX. Analysts believe that if this had happened, a domino effect would have occurred which, as in the case of LUNA, would have brought the market back into the red. What is the sequence of events?
For CZ, this acquisition aims at “Protect users”
In the late afternoon of Tuesday, Changpeng Zhao (CZ), the founder of Binance, announcement the signing of an agreement for the acquisition of FTX. This announcement comes after publication a tweet from Sam Bankman-Fried discussing the conclusion of a strategic deal with Binance.
“This afternoon, FTX asked for our help. There is a serious liquidity crisis. To protect users, we have signed a non-binding letter of intent (LOI), intending to fully acquire FTX and help cover the liquidity shortage. In the next few days we will provide a complete update on the issue ”.the Binance boss wrote.
Did we avoid a cryptocurrency drama?
This sudden deal is the result of the panic that has arisen from the latest developments over FTX’s possible financial problems. In fact, a rumor spread in the cryptocurrency community two days ago that Alameda Research may be insolvent. This is due to its excessive exposure to very illiquid altcoins, including FTT, a native token of FTX.
In the process, Binance announced that it would liquidate all of its FTT positions in order to protect itself from the risks of a possible repeat of the LUNA scenario. Additionally, CZ turned down an offer to purchase the FTTs from Alameda for $ 22 each.
A war of words had even begun between the two leaders of the crypto space. This, when CZ had claimed that he will not mate with people who conspire behind the backs of the industry players. He was therefore referring to Bankman-Fried’s troubled relationship with the political world. For his part, Bankman-Fried implicitly accused CZ of being the source of the rumor and orchestrating this scenario.
Is everything good that ends well?
This Binance update played a decisive role in FTX’s descent into hell. Between Monday and Tuesday afternoon, withdrawals were chained on FTX, many investors panicked. At one point, on Twitter and Reddit, members of the cryptocurrency community reported the withdrawal of withdrawals. This stop was even compared to that of Celsius, when the cryptocurrency lender collapsed.
The FTX boss’s tweet seemed to calm investors down. But CZ’s played a more important role. We are now confident that the FTT ecosystem will not sink.
The news of Binance’s acquisition of FTX has certainly calmed the panic and should save customers’ wallets. The arrival of the CZ cryptocurrency exchange will help cover the liquidity crisis that FTX is experiencing. If the deal is confirmed, it will increase Binance’s market share and make it an even bigger player in the cryptocurrency industry.
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Far from dulling my enthusiasm, a fruitless investment in a cryptocurrency in 2017 only increased my enthusiasm. I therefore decided to study and understand the blockchain and its multiple uses and to transmit information relating to this ecosystem with my pen.