The human arsenal might be hugely expansive in its nature, but mind you, it doesn’t have anything more valuable than our tendency to get better on a consistent basis. This tendency, in particular, has already allowed us to hit upon some huge milestones, with technology emerging as a unique member of the stated group. The reason why technology’s credentials are so anomalous is largely down to its skill-set, which was unprecedented enough to guide us towards all the possibilities that we couldn’t have imagined otherwise. Nevertheless, a closer look will reveal how the whole runner was also very much inspired by the way we utilized those skills across a real-world environment. The latter component was, in fact, what gave the creation a spectrum-wide presence, and consequentially, kickstarted a tech revolution. This revolution, as discovered later, will go on to scale up the human experience from every conceivable direction, but even after achieving such a monumental feat, technology will somehow keep on delivering all the right goods. The same has only gotten more and more evident over the recent past, and truth be told, a sensational new acquisition does a lot to make that trend bigger and better moving forward.
Binance, the leading cryptocurrency exchange, has officially signed a letter of intent to acquire one of its biggest rival, FTX, for an undisclosed fee. The acquisition follows up on FTX’s decision to pause customer withdrawals over the last few days, with the company’s last withdrawal occurring at 6:37 a.m. ET Tuesday on the Ethereum blockchain. But how are these withdrawals relevant here? Well, the stated element has been one of the biggest indications about a crypto firm being in financial distress, and once you put that alongside FTX’s own buying spree, the picture does become a lot more understandable. Another reason why this is an interesting development is because of Binance founder, Changpeng Zhao, and FTX founder, Sam Bankman-Fried’s recent clash on social media, a clash which occurred after Binance announced a decision to liquidate all of its positions in FTX Token (FTT), a cryptocurrency token created by FTX.
“Liquidating our FTT is just post-exit risk management, learning from LUNA,” tweeted Zhao, in a reference to the collapse of stablecoin TerraUSD, and its sister token, Luna, in May.
If you have been keeping up, Binance’s decision was triggered by a CoinDesk report, which stated that FTX sister company Alameda Research — also run by Bankman-Fried — holds much of its wealth in illiquid cryptocurrency assets like the FTT token, rather than an independent currency or coin. In regards to hard numbers, the report claimed as much as $5.82 billion of Alameda’s $14.6 billion of assets consisted of FTT tokens. These claims, along with Binance’s decision to exit, would spell panic among investors, leading FTX to the point of near insolvency.
“Binance is the immediate trigger, but FTX should resolve its relationship with Alameda. FTX cannot carry on its existing ownership structure with Alameda. FTX needs to completely ring-fence itself and potentially shut down the Alameda prop trading business. If Alameda’s trading operations impact FTX’s customer confidence (perception of Alameda trading against users on FTX and Alameda’s state of finances), then there is more downside to running Alameda than otherwise,” a Bernstein analyst wrote.
For Binance, the deal makes sense from a consolidation standpoint. It adds, as per FTX’s last funding round, a $32 billion company to an already $300 billion empire, and we have every reason to believe that it got the deal for much cheaper than the stated valuation. However, whether regulators will give the acquisition their green light is something that remains to be seen.