Another victim of the cryptocurrency winter: Binance bought its biggest competitor in the middle of a wild ride

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Changpeng “CZ” Zhao, CEO and founder of Binancethe world’s leading cryptocurrency exchange, announced it has reached an agreement with FTX.comits main competitor, to buy the company after the latter has suffered a run of platform userswhose, whose massive withdrawals They have put the entire sector in crisis.

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The letter of intent for the purchase came after the weekend publicly stepped up to dispute between Zhao and the founder of FTX, Sam Bankman Friedwhich led to undermining confidence in the financial strength of the company and caused a mass exodus of users of your platform

The terms of the purchase are not yet public, but Binance said the deal came in the middle “a serious liquidity crisis” who underwent FTX and that in this context the company asked for his help.

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“To protect users, we have signed a non-binding LOI, with the intention of acquiring and helping to cover the liquidity crisis,” said Zhao. in a tweet.

For its part, Bankman-Fried used the same network to thank “CZ, Binance and all of our supporters” and that their teams “are working to eliminate the withdrawal backlog as is”, after the company has announced problems for its users to withdraw cryptocurrencies of the platform.

“This will eliminate liquidity problems; all resources will be covered 1: 1. This is one of the main reasons why we asked Binance to participate, “said the head of FTX.

Confidence crisis in the crypto world: what’s behind the fall of FTX

The acquisition will reshape the market, like Binance is by far the largest cryptocurrency exchangewith a daily volume of operations estimated at approximately US $ 20,000 million, while FTX ranks second in spot tradingwith $ 2,000 million, according to data from CoinMarketCap.

For the cryptocurrency industry at large, the disappearance of FTX is another example of a once-important player when a crisis of confidence forced to manage his assets.

Like others before, including lenders Celsius networks and the hedge fund Three capital arrowsbookings proved inadequate as market sentiment reversed, although senior executives said nothing was wrong.

The tension between Bankman-Fried and Zhao It had been brewing for years, after Binance invested in FTX in 2019 at the start of the company, but the company quickly took off to become a major competitor and tensions began, partly because Bankman-Fried was advocating for increased regulations in the United Statesa company where FTX and Binance were based was facing investigations.

But the outcome of the conflict came this Sunday, when Zhao – a Chinese-Canadian businessman – announced it would sell all of its FTT holdingsFTX’s native token, valued at $ 529 million at the time due to “recent revelations come to light”.

The tweet followed a story from the cryptocurrency portal CoinDeskin which they point out that Alameda Research, a risk lending company owned by Bankman-Fried, had most of its assets in FTT’s native token – FTX, with which its users are rewarded for staying and operating on the platform, the which highlighted a great fragility in the face of changes in its price.

The doubts that the platform raised led to its collapse and also that of its token, which on Sunday was trading around 24 dollars and on Tuesday was sold for 2.50 US dollars, a 90% crash in just 48 hours.

The effect was also reflected in the total market value of cryptocurrencieswhose market capitalization fell by almost 15%, from US $ 974,000 million to US $ 820,000 million.

This Wednesday, after the news, bitcoin fell to its lowest level in the last two years and other digital assets also fell. Bitcoin was traded on Wednesday at $ 17,645 and at dawn it fell on him lowest level since December 2020. Just a year ago, bitcoin reached its highest level, $ 68,990. Ethereum, the second most traded digital currency, fell 10%.


Source: Clarin

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