Krypto reacts as a binance on the sidelines of the acquisition of FTX

Krypto reacts as a binance on the sidelines of the acquisition of FTX

The fast-developing and unexpectedly upcoming takeover of the long-standing rival crypto exchange FTX by Binance will probably take a closer look at the asset class, industry participants told block works.

The CEO of Binance, Changpeng "CZ" Zhao, tweeted on Tuesday that his stock exchange had signed a "non -binding" declaration of intent to complete FTX, and added that "FTX asked for our help" in the middle of a liquidity crisis. The step does not affect FTX's US division, and it is unclear whether the market-arm of the Market Makers is included in the purchase.

"There is a lot to report and will take some time," said Zhao in a separate tweet. "This is a very dynamic situation, and we evaluate the situation in real time. Binance has measured to withdraw from the deal at any time."

A spokesman for Binance did not immediately answer a request for comment. An FTX spokesman rejected a statement and referred to the tweets of CEO Sam Bankman-Fried.

Matt Lason, Chief Investment Officer at Globe 3 Capital, which focuses on digital assets, said that it was worrying that FTX had to get a back stop because this summer they were "the original backstops" for Celsius and Voyager Digital-crypto credit providers, which both applied for bankruptcy.

"Bear markets are strange bedding," said Lason to block works. "It is a crazy shotgun marrow that nobody saw."

Cory clipped, CEO of Swan Bitcoin, said he believes that the takeover of FTX would come about, but there are still some open questions about investors and customers. This applies in particular to the move of FTX on Tuesday, withdrawing certain cryptocurrencies.

"But as we saw in other breaks of 'CEFI' this year, there is no guarantee that all users will get well again or that this happens in good time," said Klipsten in an explanation.

Terra co-founder Do Kwon-whose company collapsed at the beginning of this year when his algorithmic stable coin was decoupled from the dollar and triggered a broadly created Implosion of digital assets-said Uponly podcast He assumes that Bankman-Fried would probably be "ok".

"I assume that the sales price has a reasonable discount on private financing," said Kwon. "If CZ intervenes and makes users healthy, there is no reason for this [Bankman-Fried] in any significant emergency. He will probably go on something else."

Eric Risley, managing partner of the consulting company for mergers and acquisitions Architect Partner, said that there was unusual to announce a takeover before the conditions are cemented - and added that a lot can shift and actually change often before the dust has subsided. While Risley said that the consolidation of crypto brokers and stock exchanges is a strategic necessity, it seems to have been driven by a liquidity crisis.

"Unfortunately, this situation is another example of how crypto learns the lessons from finance and trade," said Risley. "Liquidity and trust are essential, and without both it is an existential crisis that affects both the individual company and the entire industry about networked relationships."

How did we get here?

A sub-balance of the FTX sister company and the asset manager Alameda Research, reported from Coindesk last week that about 40 % of the company's assets worth 14.6 Billions of US dollars were attributed to the token that drives FTX trade. Alameda, founded by Bankman-Fried, is involved in proprietary trade in digital assets and risk capital investments.

alameda-CEO caroline ellison Allegations The fact that the company is about to bankruptcy did not show the full extent of Alameda's assets, including the lack of coverage of the coverage.

In a rare maneuver, zhao tweeted The FTT price then crashed.

Zhao tweeted on Tuesday - after he said that his company would buy FTX immediately - that he would expect FTT to be "very volatile" in the coming days.

The FTT rose to around $ 19 after the news of the upcoming purchase, but fell to $ 4.23 until around 3 p.m.-a decrease of more than 40 % in just one hour.

Bankman-Fried wrote after tweeting the deal that FTX was working on eliminating his payment arrears, and found that "all assets are covered 1: 1".

An FTX spokesman rejected a statement and referred to the tweets of Bankman-Fried.

The long -term effects of the potential takeover of FTX

Joseph Edwards, an investment partner at Securitize Capital, said it has become increasingly clear that the struggle between FTX and Binance would take existential dimensions - that has a far -reaching impact on the industry.

"The surprise here is of course how quickly it was completed," said Edwards to block works. "Binance is now in a really monopolistic position that they would not have had in a lengthy conflict."

Edwards added that the upcoming takeover was good for the short -term security of the industry.

"But the long -term effects could be dark if Binance is able to consolidate the lead that you now have," he said. "They were already richer than any other unit, now they can be an order of magnitude."

industry observers also said that they expect new regulatory rounds, also in the closely observed US - before the intermediate elections on Tuesday - which will result from the probable takeover.

ryan Shea, a crypto economist at the financial broker Trakx, said the speed at which the non-binding agreement was reached could inspire the authorities to analyze what was going on at FTX or Alameda Research. He added that the authorities could use this as justification in order to propose stricter regulation.

"Die-hard crypto anarchists may find such ideas repulsive, but this is probably a necessary prerequisite for a broader public acceptance of cryptocurrencies, since regulation brings with it the perception of legitimacy," Shea told Blockworks. "In addition, it will also help to gain institutional investors for the sector because they are used to operating in a regulated environment."

Zhao tweeted a few hours after he had announced the intended takeover of FTX that Binance would soon begin to implement the reserve detection.

"Banks are operated with partial reserves," he said. "Crypto exchanges shouldn't."

A spokesman for the CFTC Reuters that the supervisory authority monitored the takeover of FTX by Binance.

"It is noteworthy that the CFTC has already explained that it monitors the situation," Serhii Zhdanov, CEO of the KRYPTO exchange Exmo, told Blockworks. "The transparency of the reserves could become part of the cryptor regulation."

Michael Bodley contributed to this story.

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The article Crypto reacts as bony on brink of acquiring ftx is not a financial advice.