Official BGOL Crypto Currency Thread ★★★★★
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Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse
Binance is backing out of its plans to acquire FTX, the company said Wednesday, leaving Sam Bankman-Fried’s crypto empire on the verge of collapse.
The reversal comes one day after Binance CEO Changpeng Zhao announced that the world’s largest cryptocurrency firm had reached a non-binding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis. Earlier this year, FTX was valued at $32 billion by private investors.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity,” Binance said in a tweet on Wednesday. “But the issues are beyond our control or ability to help.”
On Monday night, facing a liquidity crunch, Bankman-Fried was scrambling to raise money from venture capitalists and other investors before he went to Binance, according to sources with knowledge of the matter. Zhao initially agreed to step in, but his company quickly changed course, citing reports of “mishandled customer funds and alleged U.S. agency investigations.”
It’s unclear who is next in line to buy the beleaguered crypto exchange. Bankman-Fried told investors that the company is facing a shortfall of up to $8 billion from withdrawal requests and needs emergency funding, according to the Wall Street Journal.
The disintegration of the Binance-FTX deal is the latest chapter in a shocking collapse that’s rocked the crypto world this week. Bankman-Fried tried to reassure investors just on Monday that the company’s assets were fine. But after Binance’s Zhao said publicly that his company was selling its holdings in FTX’s native token FTT, the selloff was on, and FTX could do nothing to stop it.
One of Silicon Valley’s most prominent VC firms, Sequoia Capital, sank $210 million into the company, according to reporter Eric Newcomer. FTX was telling investors recently that its net income in 2022 was projected to drop to $144 million this year, down from $338 million in 2021, while revenue was projected to rise to $1.1 billion from $1 billion last year, Newcomer reports.
Bankman-Fried said on Tuesday that customers had demanded withdrawals to the tune of $6 billion. He also deleted tweets from the prior day indicating that FTX had enough assets to cover clients’ holdings.
Zhao told Binance employees in a memo earlier on Wednesday that he “did not master plan” the collapse of FTX. He said FTX going down is “not god for anyone in the industry” and employees should not “view it as a win for us.”
He also told them not to trade FTT tokens while this ordeal unfolds.
“If you have a bag, you have a bag,” he wrote. “DO NOT buy or sell.”
FTT had already lost 80% of its value between Monday and Tuesday, falling to $5 and wiping out more than $2 billion in a day. It fell by more than half on Wednesday to around $2.30, shrinking the total value of circulating tokens to roughly $308 million.
Cryptocurrencies have plummeted amid the deal turmoil, with bitcoinfalling 15% on Wednesday after a 13% drop on Tuesday. It’s trading below $16,000 for the first time since November 2020. Ether, meanwhile, has plunged more than 30% over the past two days and is close to falling below $1,000.
Here’s the company’s full statement:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.
In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.
Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse
Binance is backing out of its plans to acquire FTX, the company said Wednesday.www.cnbc.com
Bad day in Crypto
Good breakdown.
The CEO Sam was positioning himself as a thought leader in the Crypto space.
Why did it take an article to expose this? Did the banks that lent them money not see this? How is that possible?
The white boys give each other money because they like each other, and not solely because of strong due diligence.
Don’t leave out the Orsini and Breakspeare clan and the rest of the “black” nobility.
breakspeare aint that Marleys people, dont tell me they on that
team adrenachrome bullshit too???
Unfucking believableWhat da fuck??? LOL
How much did they sink in to FTX? The fuckery….
FTX founder Bankman-Fried, tee-total vegan who sleeps 4 hours a night
For a one-time crypto billionaire who rubs shoulders with A-listers from Tom Brady to Bill Clinton, departing FTX chief Sam Bankman-Fried leads an unassuming lifestyle.
They didn't. They are also having issues and FTX was supposed to buy them. I don't recall what originally happened to them but I think it was related to the Terra Luna event. Now that FTX can't buy them they are back to square one which likely being insolvent.
Thanks.
If they were having solvency issues, I wonder who kept them afloat while they were working out a deal with FTX?
Going down the ladder is going to be ugly.
I believe FTX gave them a loan and later acquired them or it was in progress.
FTX founder Bankman-Fried, tee-total vegan who sleeps 4 hours a night
For a one-time crypto billionaire who rubs shoulders with A-listers from Tom Brady to Bill Clinton, departing FTX chief Sam Bankman-Fried leads an unassuming lifestyle.www.dailymail.co.uk
CEO of Alameda Research is a 28-year-old Harry Potter fan
When you're running an apparent $10bn crypto trading firm.
BANKRUPT: Crypto Whiz Resigns in Disgrace as Firm Collapses
Sam Bankman-Fried’s FTX went into a shockingly fast death spiral this week.
Financial Wunderkind Begs for Forgiveness After Going Bust
Ex-billionaire Sam Bankman-Fried took to Twitter after a bailout of his $32 billion company and his personal fortune evaporated.
