FTX Exchange is set to be acquired by Binance, pending due diligence, following a liquidity disaster from FTX, per an announcement from the CEO of FTX.
“Our teams are working on clearing out the withdrawal backlog as is,” CEO Sam Bankman-Fried mentioned relating to the pause of withdrawals on FTX property. “This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in.”
Bankman-Fried famous in his announcement that Binance.US and FTX.US “are not currently impacted by this,” stating that withdrawals are at present dwell and working usually.
Changpeng Zhao (CZ), CEO of Binance, additionally commented on the upcoming acquisition noting that Binance can pull out of the deal at any time ought to the due diligence lead to such a choice.
“There is a lot to cover and will take some time,” mentioned CZ. “This is a highly dynamic situation, and we are assessing the situation in real time.”
Moreover, the information of the acquisition can seem surprising to some as FTX tried to play a pivotal function in restoring the bitcoin and cryptocurrency ecosystem following occasions earlier than and after the Terra collapse.
Amid market turmoil, FTX moved to purchase fairly a couple of firms within the ecosystem together with: Voyager, BlockFi, and Celsius. Babel Finance additionally fell to the whims of the market, together with Three Arrows Capital.
However, now FTX is the one in misery and calling for assist. Cory Clippsten, CEO of Swan Bitcoin, reached out to Bitcoin Magazine to touch upon the evolving scenario.
“Any centralized business that rehypothecates is by definition a confidence game,” Clippsten mentioned. “With a fair value of zero for all of the non-Bitcoin altcoins on their balance sheet, all it takes is a little bit of momentum for every trader in crypto to believe it could be a great trade to short all of their positions into oblivion.”
Clippsten went on to clarify that any centralized firm with “piles of altcoins on their balance sheet” are inherently taking part in this dangerous recreation making the collaborating firms “inherently fragile, susceptible to a Lehman-like collapse at any time.”