![]() FTX needs to completely ring-fence itself and potentially shut down the Alameda prop trading business. FTX cannot carry on its existing ownership structure with Alameda. “Binance is the immediate trigger, but FTX should resolve its relationship with Alameda. So just to be clear… Binance's CEO raises doubts over the financial health of Alameda/FTX, thus causing investor panic around FTX leading a ton of investors to move their funds out, only to then… buy the company outright? In a note to clients earlier Tuesday, research firm Bernstein suggested that FTX should consider shutting down Alameda due to the perceived risks. (Hours after the news broke, the token dropped to as low as $2.51 before slight recovery.) FTT token slid to as low as $14.32 from $25.47 earlier on Tuesday as investors lost faith, according to Binance’s trading view. Alameda and Bankman-Fried had earlier refuted such concerns.īankman-Fried also founded the prop trading and market making firm Alameda, which at least has some exposure to the FTT tokens. Zhao said the firm was liquidating its FTT holdings as a “post-exit risk management,” giving some credence to a widely circulated rumor about Alameda Research’s concerning financial health. The two billionaires have been hurling snarky remarks at each other for several months, but the relationship hit an all-time low earlier this week after Zhao said that Binance was selling its holdings of FTT, the native token of FTX exchange, that it had received as part of an exit from the firm last year. The closure of the deal may attract regulatory scrutiny. ![]() The firms haven’t disclosed the financial terms of the deal, but it is likely not great / utterly terrible for investors of FTX, which was valued at $32 billion in a financing round earlier this year. But “the important thing is that customers are protected,” said Bankman-Fried, or as many call him, SBF.īinance, the world’s largest crypto exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two started to wither. “Binance has the discretion to pull out from the deal at any time,” Zhao, more popularly known as CZ, cautioned. We will be conducting a full DD in the coming days,” he said in a tweet. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. Zhao (pictured above) said Binance reached the decision after the three-year-old exchange FTX asked the crypto behemoth for help. The deal follows Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried’s months-long clash on social media, which escalated earlier this week. Binance said Tuesday it has signed a letter of intent to acquire its most formidable rival FTX, delivering a surprising twist to days-long public spat between the world’s two largest crypto exchanges that contributed to several digital tokens taking a tumble Tuesday.
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