How Binance, FTX Deal Rocked the Crypto World and Then Collapsed

Bloomberg2022-11-10

The crypto market rout deepens after a proposed rescue deal falls apart.Sam Bankman-Fried, left, and Zhao “CZ” ChangpengIt’s been a tumultuous few days in the largely unregulated cryptocurrency world,...

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Comments

HengHuat
2022-11-12
HengHuat
Some back end idiots must have gain in all these chaos. Curse them
Guavaxf30
2022-11-11
Guavaxf30
It's the beginning of the end. Tulip craze syndrome shows history always repeats itself.
TeslaLegend
2022-11-10
TeslaLegend
Nice
BeBob
2022-11-10
BeBob
Like
- HBONG:
  ok
- BeBob:
  Ok
Helloyah
2022-11-10
Helloyah
Monitor
Nggimseng
2022-11-10
Nggimseng
Gone with the wind

Leave a comment

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He counted the likes of Softbank Vision Fund, Singapore wealth fund Temasek and Ontario Teachers’ Pension Plan as investors.Sam Bankman-FriedPhotographer: Jeenah Moon/BloombergZhao is a China-born Canadian citizen who emigrated to Vancouver aged 12 and graduated with a degree in computer science from McGill University in Montreal. He started Binance in 2017 in Shanghai — but the Chinese government banned crypto exchanges the same year. He’s now based in Dubai.Why did they fall out?Back in 2019, Binance invested in FTX, then a derivatives exchange. The next year, Binance launched its own crypto derivatives, quickly becoming the leader in the field.Tensions rose as the two companies increasingly took divergent tacks with regulators. Bankman-Fried was testifying in the US Congress, while Binance was said to be facing regulatory probes around the world.The two companies have also been competing for assets, with both bidding for assets of Voyager Digital. FTX.US, the American affiliate of FTX, won the auction.Zhao and Bankman-Fried have been trading barbs on Twitter for months, feuding over issues ranging from lobbying US politicians to allegations of frontrunning trades.So what just happened in the crypto world?Over the weekend Zhao tweeted that Binance would be liquidating its holdings of a token known as FTT, which is issued by FTX.The tweet followed a story from crypto news outlet CoinDesk saying that Alameda Research, a trading house owned by FTX’s founder Bankman-Fried, had a lot of its assets in FTT token.That fueled broader concerns about FTX’s health and investors began to withdraw money. The FTT token plunged. A day before reaching a deal, Bankman-Fried said on Twitter that assets on FTX were “fine” and that “a competitor is trying to go after us with false rumors.”On Tuesday, CZ announced a potential takeover of FTX, with due diligence to be conducted “in the coming days.”Then late Wednesday afternoon New York time, Binance said it was pulling out of the deal saying its rival’s issues were “beyond our control or ability to help.” Binance executives had discovered a gap between FTX’s liabilities and assets that may amount to more than $6 billion,  a person familiar with the matter told Bloomberg.What’s more, US regulators are investigating whether FTX properly handled customer funds, as well as its relationship with other parts of Bankman-Fried’s crypto empire, including his trading house Alameda Research, Bloomberg News reported Wednesday.What does this mean for the markets?It’s injected a lot of uncertainty for investors who are worried about the potential for spreading contagion given the pivotal role FTX and its co-founder Sam Bankman-Fried played in the industry.FTT, the utility token of the FTX exchange, collapsed by more than 40% Wednesday following a tumble of more than 70% Tuesday. But just about every digital coin is struggling.Bitcoin fell as much as 15% to $15,987 on Wednesday, the least since November 2020, which leaves a lot of holders under water.What does this mean for FTX users?That’s unclear. Clients worried about the future of the exchange have already pulled out $430 million worth of Bitcoin in the space of just four days.How does this affect CZ and SBF?It’s a huge comedown for SBF, who had previously been seen as one of the most accomplished people in the industry.That’s playing out in fortunes, as well. Bankman-Fried’s 53% stake in FTX was worth about $6.2 billion before Tuesday’s takeover, according to the Bloomberg Billionaires Index, based on that fundraising round and the subsequent performance of publicly traded crypto companies. His crypto trading house, Alameda Research, contributed $7.4 billion to his personal fortune.The Bloomberg wealth index assumes existing FTX investors, including Bankman-Fried, will be completely wiped out by Binance’s bailout, and that the root of the exchange’s problems stemmed from Alameda. As a result, both FTX and Alameda are given a $1 value. That leaves SBF’s net worth at about $1 billion, down from $15.6 billion heading into Tuesday. The 94% loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg.Changpeng ZhaoPhotographer: Zed Jameson/BloombergEven after pulling out of the deal, Bankman-Fried’s fall from grace leaves CZ as the top person in the crypto world. He’s had a rough period too, with his fortune down 84% year-to-date, according to the Billionaires Index — but he’s still estimated to be worth $14.9 billion.What does this mean in terms of regulation?This episode and how quickly it unfolded provide a stark example for regulators who have been concerned about the lack of guardrails in the freewheeling crypto space. Jurisdictions that have been considering looser rules may be less likely to do so — especially on the back a few months ago of implosions in the Terra/Luna ecosystem and hedge fund Three Arrows Capital.What’s Next?Bankman-Fried told FTX.com investors on Wednesday that the company needs a cash injection, or else it would need to file for bankruptcy, Bloomberg News reported.Whether FTX survives this crisis or not, the entire industry is on edge about the risks of contagion.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":9960454445,"gmtCreate":1668232870687,"gmtModify":1676538032543,"author":{"id":"4089527924629590","authorId":"4089527924629590","name":"HengHuat","avatar":"https://static.tigerbbs.com/5854d1323f59ffe9e66dca6d58fd6af8","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Some back end idiots must have gain in all these chaos. Curse them","listText":"Some back end idiots must have gain in all these chaos. Curse them","text":"Some back end idiots must have gain in all these chaos. Curse them","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960454445","repostId":1113225170,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960680542,"gmtCreate":1668138902886,"gmtModify":1676538019357,"author":{"id":"3576140222331577","authorId":"3576140222331577","name":"Guavaxf30","avatar":"https://static.tigerbbs.com/1ff15ff6aa254c9130f9af922f7e2447","vip":1,"crmLevel":9,"crmLevelSwitch":1},"htmlText":"It's the beginning of the end. Tulip craze syndrome shows history always repeats itself.","listText":"It's the beginning of the end. Tulip craze syndrome shows history always repeats itself.","text":"It's the beginning of the end. Tulip craze syndrome shows history always repeats itself.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960680542","repostId":1113225170,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960318884,"gmtCreate":1668065575148,"gmtModify":1676538007114,"author":{"id":"3572489627147183","authorId":"3572489627147183","name":"TeslaLegend","avatar":"https://static.tigerbbs.com/180ad6f06095bcbf2b6594d26c494752","vip":1,"hat":"https://static.tigerbbs.com/f84859c65fc2d7681e28f6b8e9b0535a","crmLevel":3,"crmLevelSwitch":1},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960318884","repostId":1113225170,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960311794,"gmtCreate":1668065525218,"gmtModify":1676538007101,"author":{"id":"3585307651801295","authorId":"3585307651801295","name":"BeBob","avatar":"https://static.tigerbbs.com/4c7fb1588c34a61b54c3059c16e50b4e","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/9960311794","repostId":1113225170,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":104742841,"gmtCreate":1668077200609,"gmtModify":1668077216577,"authorId":3582855207960072,"author":{"id":3582855207960072,"authorId":3582855207960072,"name":"HBONG","avatar":"https://static.tigerbbs.com/a0b6ef216c7f159c6548906cb1930a1c","vip":1,"currentWearingBadge":{"badgeId":"972123088c9646f7b6091ae0662215be-2","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Master 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