Binance’s FTX acquisition seen as chess move by the crypto community

by · November 8, 2022

Binance’s FTX acquisition seen as chess move by the crypto community

“Who needs Netflix when you’re in crypto?” commented one user on Twitter as the crypto industry tries to digest the acquisition of cryptocurrency exchange FTX by rival Binance. The deal, revealed on November 8, has been compared to a “chess move” by some, insinuating that Binance’s strategy intentionally led to the deal.

Users on Twitter claimed that “CZ just pulled off the most gangster play we’ve seen in Crypto, ever, period,” referring to the series of tweets from Binance CEO Changpeng Zhao that triggered the acquisition.

The community also compared the move to Elon Musk’s Twitter acquisition:

In a brief summary, in a tweet on November 6, Zhao announced that the decision to liquidate Binance’s position on the FTX token (FTT) was made following “recent revelations that have come to light”, citing “post-exit risk management” reasons.

FTX founder and CEO Sam Bankman-Fried, or SBF, took to Twitter on Nov. 7 to claim that a competitor was trying to go after the cryptocurrency exchange with false rumors. FTX’s “assets are fine,” he said, stating that it had enough funds to cover all client holdings and does not invest client funds, even in Treasuries. In the same vein, SBF also called for cooperation with the rival exchange Binance.

See also  Where is crypto headed next? These 3 symbols offer a glimpse of the future

As reported by Cointelegraph, the series of tweets triggered a sell-off in FTX Token that broke below the pattern’s support line near $22.50, accompanied by a surge in volume. The selloff continued below the support line, and the token is down over 57% in the last 24 hours, trading at $9.70 at press time.

In a message to FTX’s staff this morning, the SBF said that $6 billion in net had been withdrawn from the platform over the past 72 hours, causing the exchange to “effectively halt”, adding that the situation will be resolved in ” near future,” according to reports.

On November 8, both SBF and CZ announced the acquisition citing a “liquidity crisis”, suggesting that Binance’s equity liquidation led to FTX’s insolvency. FTX’s managing director chose to seek a “rescue package from the competitor that triggered the bank run in the first place”, wrote a user on Twitter about the legal options the stock exchange had during the liquidity crisis.

The deal still depends on regulatory approval, and it is unclear whether antitrust concerns will arise from the deal.

Binance signed a non-binding letter of intent (LOI) declaring its intention to purchase FTX. Zhao added that Binance was “assessing the situation in real time” and had the option to “withdraw from the agreement at any time.”

See also  Founder of 'My Big Coin' sentenced for crypto fraud