Despite being in a bear cycle right now, the cryptocurrency market has been very active. Every day, something new and more interesting happens. While these developments are not always positive, they are signs that attention is still there for the crypto market. From Terra’s downfall to Gala’s alleged hack, the crypto market has been in the spotlight of financial magazines. Just recently, a dispute between Binance and FTX, two of the biggest cryptocurrency exchanges, happened. This caused a lot of chaos, especially on Twitter. While tensions keep rising, crypto enthusiasts are becoming more active than ever speculating about all kinds of things.
What Is Going On Between Binance & FTX?
Some days ago, there was a leak of the financial status of FTX and Alameda Research, FTX’s sister company. The balance sheet that was leaked sparked a lot of FUD in the market. Moreover, it put into question the ability of FTX to manage the funds of its users. This apparent lack of solvency spread even more panic in the market and this led to more than withdrawals amounting up to $500,000,000 in a single day. In the early morning hours of Tuesday, the FTX exchange halted all withdrawals indefinitely.
Sam Bankman-Fried, the CEO and founder of FTX, made a tweet yesterday claiming that a competitor is spreading false rumors. He also made sure to let the public know that their funds are safe with his company. Well, that does not seem to be the case since no one can withdraw anything from the exchange anymore.
Did Binance Buy FTX?
Some minutes ago, Bankman-Fried made a Twitter thread regarding an agreement reached with Binance. This agreement was referred to as a “strategic transaction” by the CEO, stating that the users are safe in the hands of CZ Binance. These recent developments led us to believe that FTX was really insolvent and they needed Binance’s help as a bailout to survive. On the thread, Bankman-Fried made sure to appraise the kind gesture of CZ, saying that he has done, and continues to do an incredible job toward improving the global crypto ecosystem. Moreover, he believes that Binance is way more committed to building a decentralized global economy than anyone else, including his own company.
Well, these hint at a bigger transaction between the two. While FTX is going bankrupt, a known crypto enthusiast and Youtuber, @MartiniGuyYT, made a tweet claiming that Binance acquired FTX as it went bankrupt. Martini Guy has been covering this case since the beginning of the chaos. Although he had controversial beliefs regarding the recent event between Binance and FTX, he was one of the first ones to make some of the news public.
Why is FTT Going Down?
The native cryptocurrency of the FTX ecosystem, FTX Token (FTT), has lost more than 70% of its value in the past 48 hours. Just a week ago, FTT was trading at a price of $25.70. After the balance sheet leak, on the 6th of November, FTT lost a small portion of its value, leaving it with a trading value of $22.15 per piece. This token kept trading near that price until Binance announced that it will be selling all of its FTT tokens. After this announcement, users of this exchange started executing panic withdrawals from the exchange and this led to FTX shutting down withdrawal services. This led to huge panic selling of FTT, crashing its price in return. Today, FTT has hit a low of $3.14, but its price started recovering since Bankman-Fried announced that they reached an agreement with Binance that will serve as a bailout for FTX.
At the time of writing, FTT is trading at a price of $4.63. This token has a 24-hour trading volume of more than $3.2 billion and a market capitalization of $615 million.
Takeaways
- There has been speculation that Binance and FTX are having a major dispute as partners.
- While this doesn’t seem to be true, the FTX exchange experienced a surge in withdrawals.
- This caused the exchange to halt withdrawals, increasing doubts regarding its solvency.
- The FTX Token, FTT, also crashed, losing more than 30% of its value in a single day.
- Binance, however, offered to help FTX bail out and survive this “attack.”
- According to Sam Bankman-Fried, FTX and Binance reached a strategic transactional agreement.
- There are rumors that Binance bought FTX as it was going bankrupt.