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FTX Agreement with Binance

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Re: FTX Agreement with Binance

#11

Post by koolba »

JumpCrisscross wrote: post #10
tyho wrote: post #3

Can someone ELI5 what has happened here?

FTX bet customer funds through the CEO’s hedge fund on an FTX token [1]. The token price fell when this was revealed [2]. The hedge fund, and thus FTX, had less money than they owed lenders and customers. FTX found a bail-out in Binance; otherwise everyone would have lost their money. [1] https://www.coindesk.com/business/2022/11/02/divisions-in-sa... [2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-..…

> otherwise everyone would have lost their money.

It's a bit early to speculate on this one.

Re: FTX Agreement with Binance

#12

Post by questime »

dna_polymerase wrote: post #9

FTX 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**.

It went to the Democratic National Committee and AI ethics organizations.

Re: FTX Agreement with Binance

#13

Post by skippyboxedhero »

mjr00 wrote: post #8
tyho wrote: post #3

Can someone ELI5 what has happened here?

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…

The fact that SBF is re-tweeting stuff from the CEO of Alameda Research (his hedge fund) is also a bit confusing. It seems like the hedge fund mainly owns FTT and that is causing a doom loop - https://www.coindesk.com/business/2022/11/02/divisions-in-sa... - https://nitter.nl/i/status/1589264375042707458

I don't understand it either to be clear. I know a little about crypto, a decent amount about finance but it does seem that the problem is not limited to FTX.

This might go down as an LTCM. Would be quite nice. Haven't had nerds setting fire to the financial system for a while.

Re: FTX Agreement with Binance

#14

Post by JumpCrisscross »

koolba wrote: post #11
JumpCrisscross wrote: post #10

Earlier quoted context omitted.

FTX bet customer funds through the CEO’s hedge fund on an FTX token [1]. The token price fell when this was revealed [2]. The hedge fund, and thus FTX, had less money than they owed lenders and customers. FTX found a bail-out in Binance; otherwise everyone would have lost their money. [1] https://www.coindesk.com/business/2022/11/02/divisions-in-sa... [2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-..…

> otherwise everyone would have lost their money. It's a bit early to speculate on this one.

> bit early to speculate on this

We’ve seen the balance sheet. The facts have been on the table for FTX as much as they are for Tether.

I can’t say when they will fail. But as soon as we saw the Alameda books and Alameda and FTX’s responses (the former, an irrelevant statement about other assets; the latter, a claim of solvency without proof), the endpoint was sealed. Insolvent, leveraged entities don’t pay out junior creditors absent a bail-out.

Re: FTX Agreement with Binance

#15

Post by skippyboxedhero »

questime wrote: post #12
dna_polymerase wrote: post #9

FTX 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**.

It went to the Democratic National Committee and AI ethics organizations.

Stop the count. Refund the man his money.

Re: FTX Agreement with Binance

#18

Post by throwup »

mjr00 wrote: post #8
tyho wrote: post #3

Can someone ELI5 what has happened here?

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?

Re: FTX Agreement with Binance

#19

Post by djbebs »

dna_polymerase wrote: post #9

FTX 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**.

You're asking the wrong question.

The right question is "where did all that money come from?"

Hint: their clients somehow can't withdraw their money...

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