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Binance vs. FTX: Clash of the Titans | CZ Selling FTT Tokens | The Story of SBF’s Backroom Binance Deal and Lessons Learned | Binance Drops Bid to Save Rival | Developing…

Crypto News Flash | Ibukun Ogundare | Nov 7, 2022

SBF and CZ - Binance vs. FTX: Clash of the Titans | CZ Selling FTT Tokens | The Story of SBF's Backroom Binance Deal and Lessons Learned | Binance Drops Bid to Save Rival | Developing...

In a recent tweet, Binance CEO Changpeng “CZ” Zhao disclosed that he would sell off the FTT tokens in his possession. He explained that Binance received about $2.1 billion in the form of BUSD and FTT tokens last year. The amount was received while the cryptocurrency firm was exiting its partnership with FTX, Alameda’s sister company. FTX and Alameda Research are top exchange and trading platforms owned by Sam Bankman-Fried. Despite the explicit explanation made, the Binance boss did not state the exact amount of FTT tokens remaining on his books. 

He further disclosed that the action would be carried out gradually to help minimize market impact. CZ wrote:

…Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.

See:  How Does Binance Shape the Market

In response to CZ’s tweet, Caroline Ellison of Alameda Research tweeted that her company’s financial health is stronger than the leaked balance sheet. In addition to that, she proposed to buy the FTT tokens from Binance for $22 each.

Why is Binance planning to sell its FTT tokens?

Before CZ’s announcement, a balance sheet belonging to Alameda Research was leaked. The balance sheet revealed that Alameda had $5.8 billion of FTT tokens, as recorded on June 30. It also shows that Alameda currently has $14.6 billion in assets and $8 billion in liabilities, including $7.4 billion in unidentified loans. Perhaps CZ feared FTT would take the path of Terra’s Luna Crash. 

After the circulation of the leaked balance sheet, the CEO of Alameda Research gave a few notes about the info. She said the circulating balance sheet is meant for the company’s corporate entities and that over $10 billion of assets were not reflected there. She buttressed that some hedges were not listed and a gross amount of the loans had been settled. 

Continue to the full article --> here


Binance vs. FTX: Clash of the Titans

Arcane Research | Nov 8, 2022

Friction between the two most influential crypto exchanges has escalated throughout 2022. It has reached hostile levels in the last couple of days following the release of a Coindesk article related to Alameda Research’s (FTX subsidiary) assets and liabilities. We elaborate on the necessary details on page 6. The key takeaway from the entire ordeal is that FTX is facing an ongoing bank run caused by Binance and its CEO, Changpeng Zhao (CZ), actively selling FTT and racing concerns related to the financial health of FTX.

FTT has fallen from $26 to lows of $15 over the last seven days, experiencing an initial push south following a Coindesk article. FTT has since experienced massive news-driven volatility. Speculative interest in FTT has exploded amid the drama. Open interest relative to market cap sits at 7.65% compared to 2.8% last week. The growing open interest has been accompanied by massively negative funding rates at Binance and Bybit, suggesting a substantial demand for shorting FTT. This could be a potent environment for a squeeze.

See:  Binance CEO’s net worth make him (at least) the world’s 11th richest person currently

We view the risks of FTX insolvency as minimal and comparisons between FTT and the LUNA/UST mechanism as fundamentally wrong, as the structure of FTT, is utterly different from the demand dependency of LUNA/UST. However, we view it as likely that this event might have a long-term reputational impact on FTX and possibly generate hedging-related selling pressure in BTC.

Download the full research report --> here


Coindesk | Daniel Kuhn | Nov 8, 2022

Binance, after exacerbating a bank run on rival crypto exchange FTX, offered to buy out the jewel in SBF's crown.

  • FTX Agrees to Sell Itself to Rival Binance We may never know how close Sam Bankman-Fried’s (SBF) crypto empire came to collapse, or the collateral damage that would have caused for the industry, but we do know the principal risks at play.
    • The deal, still subject to due diligence processes and not completed, is a stopgap measure to save SBF’s crypto exchange from insolvency. It will likely calm markets that had been rocked by a public rift between two crypto titans so well-known as to go simply by their initials.
  • Bank runs and withdrawals:  can be self-fulling prophecies. Although several analysts said it was unlikely that either FTX or Alameda would suffer a margin call, investors began pulling funds, concerned their capital would be locked up in bankruptcy proceedings like with neobanks Celsius and Voyager Digital.“
    • Alameda will never be able to cash in a significant portion of FTT to pay back its debts,” Mike Burgersburg, an independent market analyst for Dirty Bubble Media, which was early to call the collapse of Terra/LUNA, said.

See:  Voyager Digital Faces Delisting from the TSX and Files For Bankruptcy

  • Bankman-Fried and Alameda CEO Caroline Ellison did what they could to calm investors’ nerves, offering to mitigate a steep selloff of FTT by offering CZ $22 per token. That’s what he said in public. For CZ, the bigger concern was what was said behind closed doors, “[W]e won’t support people who lobby against other industry players behind their backs,” the Binance CEO tweeted this weekend. This was CZ’s attempt at being “transparent,” he said, explaining a large transaction of over $500 million FTT tokens to Binance made the day before.
    • He announced Binance would be selling these tokens into the open market, and drew a worrying comparison to LUNA, another project Binance was early to back that later collapsed after a bank run. CZ was seizing the moment caused by market uncertainty, after Alameda Research’s financials were leaked to CoinDesk.

“[R]egardless of how it ends, it’s another blow against the industry (and financial institutions in general) simply for a lack of voluntary transparency, but it’s another giant check mark for the transparency of blockchain data and the skilled researchers trained to uncover, read, and interpret this data,” Jeff Dorman, chief investment officer at crypto hedge fund Arca, said.

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Cointelegraph | Luke Huigsloot | Nov 8, 2022

In a Nov. 8 tweet, Zhao laid out two learnings after the significant “liquidity crunch” at FTX, which has ultimately resulted in a non-binding letter of intent from Binance to acquire the struggling exchange.

See:  We’re Creating Machines That We Cannot Control

While Binance does not currently disclose proof of what reserves it uses as collateral, Zhao mentioned in a Nov. 8 tweet that in an effort to be fully transparent Binance will soon provide proof of reserves, adding:

“Banks run on fractional reserves. Crypto exchanges should not.”

Continue to the full article --> here


CNN Business | | Nov 9, 2022

In an abrupt reversal, cryptocurrency exchange Binance pulled out of a deal to acquire its embattled rival FTX, saying the company’s problems were “beyond our control or ability to help.”

  • Binance, the world’s largest crypto exchange, said it reviewed FTX’s finances as part of the due diligence process, and it cited reports of “mishandled customer funds and alleged US agency investigations” in announcing the deal was off.

See:  Canadian Government Begins Crypto Consultations with Digital Asset Stakeholders

  • Without a bailout, FTX is poised to collapse, along with the rest of Bankman-Fried’s vast crypto empire.  According to the Wall Street Journal, Bankman-Fried told investors Wednesday that he needs emergency funding to cover a shortfall of up to $8 billion due to withdrawal requests received in recent days.
  • According to Bloomberg, the meltdown of FTX has is already under investigation by the Securities and Exchange Commission and the Commodity Futures Trading Commision. The site reported that the regulators are investigating whether FTX properly handled customer funds, citing people familiar with the probe.

Continue to the full article --> here


The Impact and Fallout:  Developing Story

Alameda Research Winding Down

Most of FTX's Legal and Compliance Staff Quit

The U.S. securities regulator is investigating crypto exchange FTX.com's handling of customer funds amid a liquidity crunch, as well its crypto-lending activities, a source with knowledge of the inquiry said on Wednesday.

Sequoia Capital writes off its FTX investment

Ontario Teachers invested twice in FTX, taking part in each of its $400 million Series C rounds and its $420 million USD round from last October.

Bahamian regulator freezes FTX assets

White House response 'Prudent crypto regulations is needed

 


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