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Binance announced that it will buy main competitor after suffering a crypto bull run

Binance announced that it will buy main competitor after suffering a crypto bull run

This is the worst day for this market since the middle of last May, when the collapse of the Terra-LUNA ecosystem dragged with it more than $40 billion in losses in a few days.

The letter of intent for the purchase came after a dispute between Zhao and FTX founder Sam Bankman-Fried publicly escalated this weekend, undermining confidence in the company’s financial strength and causing a mass exodus of users from its platform.

The terms of the purchase are not yet public, but Binance said that the deal came amid “a significant liquidity crisis” that FTX suffered and that within that framework the firm asked for its help.

“To protect users, we signed a non-binding LOI, intending to acquire FTX.com and help cover the liquidity crisis,” Zhao said in a tweet.

For his part, Bankman-Fried used the same network to give “a big thank you to CZ, Binance, and all of our supporters” and that their teams “are working to eliminate the withdrawal backlog as they are,” after the company announced problems for its users to withdraw the cryptos from the platform.

“This will eliminate liquidity issues, all assets will be hedged 1:1. This is one of the main reasons why we have asked Binance to participate”assured the owner of FTX.

The acquisition will reshape the market, as Binance is the largest crypto exchange by far, with daily trading volume estimated at around $20 billion, while FTX ranks second in spot trading, at $2 billion. , according to data from CoinMarketCap.

For the cryptocurrency industry in general, the demise of FTX is another example of a player once standing out when a crisis of confidence forced its assets to run.

Like others before it, including lenders Celsius Networks and hedge fund Three Arrows Capital, reserves proved inadequate when market sentiment turned against them, even as top executives said nothing was wrong.

Tension between Bankman-Fried and Zhao had been brewing for years, after Binance invested in FTX in 2019, at the company’s early days.but the company quickly took off until it became a major competitor and tensions began, in part because Bankman-Fried was defending greater regulations in the United States, a company where FTX was based and Binance was facing investigations.

But The denouement of the conflict came this Sunday, when Zhao announced that he would sell all his holdings of FTT, FTX’s native token, worth $529 million at the time due to “recent revelations that came to light”.

The tweet followed a story from cryptocurrency portal CoinDesk, in which they noted that Alameda Research, a venture lending firm owned by Bankman-Fried, had most of its assets in FTT – FTX’s native token, with which its users are rewarded for staying and operating on the platform, which evidenced a great fragility in the face of changes in its price.

The doubts that the platform aroused today led to its collapse and also that of its token, which was trading around $24 on Sunday and was sold for $2.50 on Tuesday, a 90% crash in just 48 hours.

The effect was also reflected in the total market value of cryptocurrencies, whose capitalization fell by almost 15%, going from US$974 billion to US$820 billion.

Source: Ambito

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