Binance acquires a major rival after days of speculation over FTX’s insolvency.
FTX Failings Lead to Binance Takeover
Take a deep breath, crypto world. Another titan has fallen. In what could become one of the most revelatory and watershed days of crypto history, Binance has signed a non-binding letter of intent to fully acquire its rival FTX. Once again, in 2022, billions were wiped from the market.
The move was announced late Tuesday evening and sent a shockwave through the entire industry. Twitter chaos ensued. Markets rallied and then fell–BNB reached a high of $384 before falling to around $303. Massive swings in the market were accompanied by massive swings (read punches) from major players.
Just a day after Sam Bankman-Fried (SBF) called for levelheadedness in the wake of major speculation, the wealth of SBF, founder and the face of FTX, fell around 94% at the hands of his rival, Binance CEO Changpeng Zhao (CZ). And the main businesses–FTX and Alameda Research– connected to SBF have been eviscerated.
The non-binding agreement is still pending a ‘Due Diligence’ investigation, according to CZ and SBF. In what was called a “user-centric” move that should be seen as helping the whole industry, SBF thanked CZ and Binance for their efforts. It’s hard not to see the move as cold and calculated by CZ as well.
There is still much to uncover about what occurred on Tuesday. The crypto world has surely crossed into a new paradigm where speculative markets are no longer king. A major issue that led to FTX’s insolvency was the over-collateralization of the company but using its own token to back the loans it had.
Well-known crypto lawyer Lyn Alden explained it best in a few tweets, in an almost ‘Explain Like I Am 5’ message. Read the thread below.
There are still many questions left unanswered. Were FTX’s negotiations entirely legal? Will crypto learn from the speculative mistakes of 2022? What will happen to the Solana ecosystem, which was backed heavily by VC money from Alameda Research and FTX? What will become of SBF, the once Golden Boy of Crypto? Does Binance now hold too much market share? Will Binance even follow through with the deal?
For some, this could be enough to abandon the industry altogether. While others–like Brian Armstong, CEO of Coinbase— hope this could lead to better regulation and safer markets. But for right now, the market feels like ground zero after a major catastrophe, and it will take some days for the dust to settle.
Source : bsc.news
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