Binance takes over FTX after bank run
Binance takes over FTX after massive bank run. This emerges from new publications by the managing directors of both companies. According to this, the second largest crypto exchange in the world actually got into financial difficulties and asked the industry leader for help. He made an offer to purchase the entire company.
Binance buys FTX
The events surrounding the crypto exchange FTX are overturning. Coinbestnews already reports today on the complete background of the conflict between Binance and FTX and on the apparent bottlenecks in the liquidity of FTX .
Suffice it to say that Alameda Research, a kind of trading and investing arm of FTX, was rumored to be in trouble. The company’s liquidity is running out. Binance then announced that it would cut all ties to FTX.
Announcements about this led to a massive run on banks. Users turned away from FTX en masse and withdrew their funds. FTX can no longer withstand the onslaught and turns to the responsible competitor Binance for help.
A few minutes ago, Binance CEO Changpeng Zhao announced on Twitter : Binance buys FTX! This is how he writes:
This afternoon FTX asked us for help. There is a significant liquidity bottleneck. To protect users, we signed a non-binding letter of intent to fully acquire FTX to fill the bottleneck.
FTX founder Sam Bankman-Fried also confirmed this development via the short message service Twitter.
What does the takeover mean in concrete terms?
With this decision, Binance is accelerating its role as the most powerful crypto exchange in the world. Since this is a takeover of the second largest provider by the largest representative, regulatory requirements could stand in the way.
Details on legal discrepancies and the takeover are not yet available. CZ intends to publish more detailed information in the coming days. It is evident, however, that the suspicion of the critics has become true, at least in the last few hours:
FTX succumbs to illiquidity. Many users made comparisons with the Terra crash in May 2022 in advance . As it turns out, there could be more parallels than previously recognized.
The collapse of Terra was largely caused by mass panic. Although most of the users blamed the developers, trust in the cryptocurrency fell so drastically that nobody was able to stop the price slump.
For users of FTX, the takeover is initially positive. You don’t have to expect any personal losses.
