“Who needs Netflix anymore when you're in space cryptocurrency?” – this is a comment from a user when the industry cryptocurrency try to digest Binance acquires rival exchange FTX. The deal, revealed on November 8, has been compared by some to a "dangerous move", a reference to the company's deep strategy. Binance to come to an agreement.
One Twitter user had to utter a wonderful sentence about CZ's move and praise the CEO's response FTX Sam Bankman-Fried (SBF):
“CZ just put on the best gangster show we've ever seen in Crypto, ever. Indeed - great.
Besides, Sam is also really brave in choosing the correct option to protect the client's assets, swallow his pride and not destroy everything in an unnecessary fight."
CZ just executed the most gangster play we've seen in Crypto, ever, period. The BALLS on this man. Truly — bravo.— Autism Capital (@AutismCapital) November 8, 2022
Also bravo to Sam to choose the correct option that protects customer assets, swallow his pride, and not burn everything down in an unnecessary fight.
WHAT A SHOW!
The community also compared this move to Twitter's acquisition of Elon Musk:
Previously, in a tweet on November 6, Zhao announced the decision to liquidate Binance's position on the FTX token (FTT) came after "recent revelations came to light", citing "post-exit risk management".
Then on November 7, the SBF claimed that a competitor was trying to play bad with false rumors. He said FTX's assets were fine and stated that there was enough money to cover all of the client's holdings, while not investing the client's assets, even in the treasury. In the same thread, SBF also called for a partnership with rival exchange Binance.
A series of tweets triggered the sell-off FTT and pushed the price to break below the support line of the pattern near $22.5, accompanied by a spike in volume. The sell-off continues below the support line and the token is down over 72% over the past 24 hours, trading at $5.8 at press time, after sinking to a low of $2.4. This rally seems to have been catalyzed by the news that Binance wants to buy back FTX.
In a notice to FTX employees this morning, the SBF said that a net $6 billion has been withdrawn from the platform in the past 72 hours, resulting in the exchange being “effectively halted,” it added. that the situation will be resolved in the “near future”.
On November 8, both SBF and CZ announced the acquisition, citing “liquidity degradation,” implying that the liquidation of Binance’s equity resulted in the insolvency of FTX. One user on Twitter wrote about the legal options the exchange has during the liquidity crisis.
“Okay, let's get this clear because I think FTX has a choice – out of all the options, a buyback from Binance.
These are the options open to SBF: (a) seeking emergency loan financing, (b) seeking new cash investments, (c) liquidating assets and/or (d) buying time. delay the event for my own benefit…”
But it seems the FTX CEO chose to seek “the bailout from the competitor that triggered the sell-off in the first place.”
The deal is still subject to regulatory approval, and it's unclear whether antitrust concerns arise from the deal.
Binance signed a non-binding letter declaring its intention to purchase FTX. CZ said he expects FTT “to see a lot of volatility in the coming days as things develop” as Binance assesses the situation at FTX. Furthermore, he remarked that “Binance reserves the right to withdraw from the deal at any time,” indicating that the acquisition is not a well-established deal.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.— CZ Binance (@cz_binance) November 8, 2022