Binance Backs Out & FTX Takes the Hit, FTX is a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried and Gary Wang.

Topics
The History
The Story
The Drop

The History

The company has raised over $1 billion from investors including Temasek, Tiger Global, and Blockfolio.
FTX was one of the fastest-growing exchanges in the industry with a wide range of products and services for both retail and institutional investors.

FTX, a cryptocurrency derivatives exchange, has seen tremendous growth in the past year.
In January of this year, FTX’s U.S. arm was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.
Just four months later, FTX had raised an additional $400 million from investors including SoftBank at a valuation of $32 billion.

This exponential growth is due in large part to FTX’s innovative products and services.
For example, FTX offers tokenized versions of popular assets such as stocks and commodities which allows traders to gain exposure to these markets without actually owning the underlying asset.
This has made FTX one of the most popular exchanges among traders looking for alternative investment opportunities.

The Story

It’s been a tough 24 hours for Sam Bankman-Fried and his crypto empire.
However, not everything has been smooth sailing for FTX.
In August 2019, the U.S. bank regulator ordered FTX to halt “false and misleading”
claims it had made about whether funds at the company are insured by the government.
Then in September 2020, FTX’s venture capital fund said it would buy a 30% stake in SkyBridge Capital
(a move that was later criticized by some).
Most recently, on November 2nd 2020, crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research (Bankman-Fried’s crypto trading firm) was heavily dependent on FTT (FTX’s native token).

Yesterday, Binance announced that it had reached a non-binding deal to acquire FTX’s non-U.S. businesses for an undisclosed amount.
This came as a surprise to many in the industry,
as FTX has been embroiled in a liquidity crisis in recent months.

However, it appears that Binance has had a change of heart and is now backing out of the deal,
tweeted today “But the issues are beyond our control or ability to help.”
And in another statement, the company said: “After further consideration,
we have decided not to proceed with the acquisition of FTX.
We will continue to support the growth of the crypto ecosystem and look forward to working with other projects in this space.

The Drop

With customers demanded withdrawals to the tune of $6 billion
and the exchange’s CEO, Sam Bankman-Fried, deleted tweets from the prior day
indicating that FTX had enough assets to cover clients’ holdings.

This event has sent shockwaves throughout the industry and has called into question the stability of crypto exchanges. Binance CEO Changpeng Zhao issued a memo to employees on Wednesday saying that he “did not master plan” the collapse of FTX and that it is not good for anyone in the industry.

This event is a reminder of how volatile and risky cryptocurrencies can be.
For investors and traders looking to enter this market,
it is important to do your due diligence and only invest what you are willing to lose.

First, OKEx suspended withdrawals amid rumours of founder arrest,
then KuCoin suffered a major hack, and now FTX has collapsed following mass client withdrawal requests.

FTT was trading at around $3.50 on November 8th when the exchange suddenly announced that it would suspend all withdrawals indefinitely. This led to a massive sell-off as clients rushed to exit their positions before the price dropped.
By the end of the day, FTT had lost 72% of its value and was trading at just $0.98.

Binance had initially offered to bail out FTX by purchasing $100 million worth of its tokens,
but after due diligence, they decided against it and pulled out of negotiations.
This left FTX with no choice but to liquidate all its assets in order to meet client withdrawal requests.
As a result, FTT is now worthless and many investors have been left holding useless tokens.

Binance Backs Out &#038; FTX Takes the Hit

Related Topics

Binance Backs Out & FTX Takes the Hit