Crypto exchange Binance takes on rival FTX

Crypto exchange FTX suddenly ran out of customers, there was a threat of running out of money. Now the head of arch-rival Binance wants to rush to the rescue.

Sam Bankman-Fried, known as SBF, is considered the guru of the scene.

Ftx / Reuters

A new day, new drama in the crypto world – and it hits Sam Bankman-Fried (SBF) of all people. On Tuesday, the founder of self-proclaimed cryptocurrency exchange FTX had to sell his company to rival Binance after suddenly running out of liquidity.

With that, the second largest trading platform of its kind fell in the blink of an eye, and the shock waves are seen in the prices of Bitcoin, Ethereum, Ripple, Cardano, Solana and other alleged assets – often dropping by as much as double. digits.

“Messiah of the Cryptoscene”

It just looked completely different, after all, SBF was considered a lucky survivor in a scandal-ridden and extremely volatile industry. As the founder of FTX, the young man wanted to become extremely rich in cryptocurrency trading in a very short time. As a guru of the scene, he hounded the media almost every day and was regularly drawn into the game immediately “savior”. how the cryptocurrency or fintech scene is stuck somewhere.

Bitcoin – before another crash?

Development of the exchange rate in dollars

Is Robinhood, the “democratic agent of miracles for the small, decent man in the street,” in dire need of new capital? No problem, SBF takes over a significant block of shares. Apparently innovative crypto projects like BlockFi, Voyager Digital or Celsius are running into a wall operationally? Don’t worry, SBF will intervene. In his prime, the youngster even flirted with the idea of ​​one day being big enough to take over the CME futures exchange or the investment bank Goldman Sachs.

Now the megalomania is over, as the “messiah of the crypto scene” had to be saved by himself – Changpeng Zhao, of all people the founder of arch-rival Binance. The exact framework conditions have not yet been announced in the short term and in view of the general lack of transparency in the industry, but from the point of view of experts, it is likely that Sam Bankman-Fried will largely lose his billion-dollar fortune.

Binance founder Changpeng Zhao is expanding his influence in the crypto world.

Binance founder Changpeng Zhao is expanding his influence in the crypto world.

Pedro Nunes / Reuters

This applies not only to him personally, but also to many investors who are attracted to the risk of cheap central bank money, such as the Softbank Vision Fund, the Singaporean sovereign wealth fund Temasek or the careless teacher pension fund of the Canadian province of Ontario, which was listed on the stock exchange in January FTX $400 million and valued it at $32 billion at the time. In general, all cryptocurrency lovers must ask themselves: “If SBF is not safe, then who is?”

Various allegedly disruptive crypto hedge funds and trading firms have collapsed in recent months, but FTX was by far the biggest. The circumstances, on the other hand, are nothing new: a trading company has become a victim of “escape”. After suddenly losing confidence in the financial health of FTX, some users started withdrawing money and cryptocurrencies en masse from their accounts. This created its own momentum as others felt compelled to do the same.

Changpeng Zhao is not entirely to blame. The founder of Binance had a stake in FTX, but announced last Sunday that he intends to sell the FTT tokens he holds on the rival exchange, initially worth $580 million, in the coming months. As a result, its price fell 7.5 percent before finally plunging a whopping 72 percent on Tuesday, remaining low even after Binance eventually made a takeover bid. This development once again makes it clear to investors and regulators how fragile and volatile crypto markets are.

Failure after detrust: FTT, exchange token* FTX

Development of the exchange rate in dollars

Experts hope that FTX customers will eventually be able to access their funds again after the takeover. However, this is not certain, especially since practically no details have been published so far. Aside from the other question marks, so far it’s only been a non-binding statement of intent that affects FTX’s international business — not the US business, which is separated from it for regulatory reasons. “This is a highly dynamic situation and we are evaluating the situation in real time,” Zhao said on Twitter, adding, “It is at Binance’s discretion to terminate the agreement at any time.”

Binance in focus of regulators

Binance is already considered the world’s largest cryptocurrency exchange by volume, and buying FTX would clearly dominate the market. Originally from China, Changpeng Zhao launched it in 2017, grew it quickly and now has a huge impact on the industry. However, skeptics are not sure if this is good or bad. While other key players would like to come to an agreement with regulators and steer the market in “respectable directions”, the man from the Middle Kingdom doesn’t seem particularly interested. Binance actually runs a website that allows customers from all over the world to trade cryptocurrencies – but without a legal seat or approvals.

Not only does this constellation automatically put the company in the spotlight of various supervisory authorities, but also its way of working. If you believe the various allegations, the company states that it cooperates with regulatory authorities, but at the same time withholds crucial information, does not adequately monitor the seriousness of its customers and repeatedly acts contrary to the recommendations of its own compliance department.

Of course, Binance doesn’t want to know anything about it. “It has taken more action against Russian money laundering operations than any other crypto exchange. This includes the removal of Suex, Chatex and Garantex,” the company said. “How the CEO of Binance and his assistants are trying to bypass the regulatory authorities in the US and the UK,” Reuters counters in an article.

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