Binance Plans To Buy FTX: How Did This Happen?

November 09, 2022

We gathered the main points of this news so you didn’t have to. Here is the history of the Binance and FTX relationship as well as how it turned out the way it did today:

December 2019: Binance invested in FTX

According to CoinDesk, Binance made an undisclosed investment in FTX, a derivatives exchange at the time. Additionally, Binance acquired long holdings in FTT, the native cryptocurrency of FTX.

July 2021: Binance sells its FTX stake

According to Fortune, Binance disclosed that it was selling its FTX holding. Binance received the equivalent of $2.1 billion in Binance’s stablecoin and FTT as part of the exit, according to Binance CEO Changpeng Zhao.

November 2: CoinDesk reports on a leaked Alameda Research balance sheet

CoinDesk reported on a leaked balance sheet from Alameda Research, FTX CEO Sam Bankman-Fried’s crypto trading firm that is closely affiliated with FTX.

According to CoinDesk, $3.66 billion of Alameda’s $14.6 billion in assets are kept in “unlocked” FTT. The report’s accuracy and the source of the leaked balance sheet were both unconfirmed.

However, investors soon discovered that FTX, the token’s biggest customer, looked to be excessively reliant on purchases from FTT. Besides that, FTT’s value was similarly heavily reliant on purchases from Alameda.

November 6: Zhao tweeted that Binance would liquidate its FTT Holdings

On Sunday, Zhao tweeted that Binance will sell its FTT holdings “because of recent facts that have come to light,” but he did not specify which revelations or the exact amount of the token that Binance had. This tweet has raised concerns among FTT holders.

As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4

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CZ Binance (@cz_binance) November 6, 2022

Nov 7: Bankman-Fried responds to the circulating rumors

Bankman-Fried said in a Twitter thread on Monday that “a competitor is trying to go after us with false rumors.”

“FTX is fine. Assets are fine”, he remarked.

In a later tweet, he mentioned Zhao by name and wrote, “I’d love it, @cz_binance, if we could work together for the ecosystem.”

Nov 8: FTX experienced a sudden surge of withdrawals from their crypto exchange.

FTX had experienced roughly $6 billion in withdrawals in the 72 hours before Tuesday morning. Bankman-Fried stated that withdrawals have effectively been halted in a post on Tuesday morning.

Nov 9: FTX’s CEO announced that Binance will acquire FTX.com, aside from its US entity.

After that, Bankman-Fried tweeted that FTX had “come to an agreement on a strategic transaction with Binance for FTX.com.” He also mentioned that while teams were working on clearing the backlog of withdrawal requests, all assets would be covered 1:1.

1) Hey all: I have a few announcements to make.

Things have come full circle, and http://FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for http://FTX.com (pending DD etc.).

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SBF(@SBF_FTX) November 9, 2022

Zhao later tweeted that FTX is experiencing “a serious liquidity shortage,” and Binance has signed a non-binding letter of intent to acquire FTX.com, except FTX’s U.S. entity, in order to protect users.

This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.

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CZ Binance (@cz_binance) November 6, 2022

And that’s how the Twitter feud between the two CEOs has been concluded. According to some sources, Binance planned to buy FTX and did this on purpose to achieve this goal. Binance’s CEO denies all these allegations and says that he spends his time building and not fighting.

The fact that it sparked such levels of “discussions” was surprising. There were also conspiracy theories that I somehow orchestrated this whole thing. If you read this thread, you would appreciate that no one can orchestrate this. 3/4

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CZ Binance (@cz_binance) November 6, 2022