Anyone wanting to know more about what led to this whole fiasco, I would highly recommend this read: https://dirtybubblemedia.substack.com/p/is-alameda-research-...
FTX Agreement with Binance
21–30 of 45 posts
Re: FTX Agreement with Binance
#22[deleted]
Re: FTX Agreement with Binance
#23From the announcement, Binance is not definitively buying FTX. They've agreed to discuss acquisition and do due diligence. Which means finding out how deep a hole FTX is in before proceeding.
As a rule of thumb, about half of announced M&A deals don't happen.
FTX is a licensed money transmitter in many US states. In some states they need regulatory approval for an acquisition. Binance is headquartered in the Cayman Islands. Regulatory approval will not be easy to get. US bankruptcy courts will have a say, too. FTX acquired another bankrupt crypto company just two months ago, and the bankruptcy judge in that case may have something to say about it.
Bloomberg has a story.[1]
WSJ has a story.[2]
This is going to be a big mess.
[1] https://www.bloomberg.com/news/articles/2022-11-08/crypto-ex...
[2] https://www.wsj.com/livecoverage/stock-market-news-today-11-...]
Re: FTX Agreement with Binance
#24Earlier quoted context omitted.
To the best of my understanding, - starting state had FTX as insolvent, but had enough money to cover the withdrawals of their token (FTT) - Binance CEO announces that they're going to dump all of their FTT because they don't trust the stability of it - now there's a bank run, and people are making enough withdrawals to expose that FTX is insolvent - FTX pauses withdrawals (because they don't have the cash) - Binance…
Can someone explain why FTX created their own token in the first place? Was it just a way to raise money/distribute equity without dealing with stock market regulations?
Yes, it gives you a discount on trading and can be used to buy things from FTX, and it was originally a fundraising mechanism.
Re: FTX Agreement with Binance
#25Some elements of the crypto space may not need to be regulated, but centralized exchanges should be regulated as hard as banks and should regularly undergo liquidity stress tests. If FTX does turn out to be insolvent, execs should be getting more than a slap on the wrist
Re: FTX Agreement with Binance
#26From the announcement, Binance is not definitively buying FTX. They've agreed to discuss acquisition and do due diligence. Which means finding out how deep a hole FTX is in before proceeding. As a rule of thumb, about half of announced M&A deals don't happen. FTX is a licensed money transmitter in many US states. In some states they need regulatory approval for an acquisition. Binance is headquartered in the Cayman I…
They are buying FTX - not FTX.US, I would imagine it is fine.
Re: FTX Agreement with Binance
#27All of this is looking fishy, at best.
Re: FTX Agreement with Binance
#28FTX was *throwing* money at everything moving in the crypto space. Where the heck did all the money go? Did they just spend VC money as long as they could and ran out now? Or did all the money disappear through the Alameda pipe? I really hope that there will be an investigation into the whole thing. Liquidity crunch my a**.
Agreed. He offered Elon a billion dollars for Twitter stock just a few months ago.
Re: FTX Agreement with Binance
#29FTX agreed to buy Voyager Digital because Voyager was insolvent after Three Arrows Capital went bust. Guess there's always a bigger fish...
> FTX agreed to buy Voyager
Wait, was that ever finalized?
Re: FTX Agreement with Binance
#30Earlier quoted context omitted.
To the best of my understanding, - starting state had FTX as insolvent, but had enough money to cover the withdrawals of their token (FTT) - Binance CEO announces that they're going to dump all of their FTT because they don't trust the stability of it - now there's a bank run, and people are making enough withdrawals to expose that FTX is insolvent - FTX pauses withdrawals (because they don't have the cash) - Binance…
Can someone explain why FTX created their own token in the first place? Was it just a way to raise money/distribute equity without dealing with stock market regulations?
Why does anyone create their own token? Once you get people using it, then you can just "print more" and make yourself incredibly rich. Creating wealth out of nothing but people like your foobar token and they will convert other tokens to/from it. You can sell it to sell fake equity (without usual oversight) in a company too.