The demise of the second largest crypto exchange in the world, FTX, is a dark period in the history of the crypto world. However, according to some, the rescue is near, as Binance wants to acquire FTX, but a day later, there is still great uncertainty about this acquisition.
The acquisition of FTX
Although Binance yesterday signed a non-binding letter of intent (LOI) to fully acquire FTX, there are still serious doubts about whether the acquisition will actually succeed. The uncertainty surrounding the bankruptcy of FTX and Alameda has therefore hit the market hard.
One of the reasons for the uncertainty about the acquisition is that the terms of the acquisition have not been disclosed. In addition, Binance CEO Changpeng Zhao (CZ) said he could withdraw from the deal at any time.
In a now leaked letter from Bankman-Fried to his investors, he expresses this uncertainty. Sam Bankman-Fried apologizes in this letter for the lack of communication regarding the deal with Binance.
I’m sorry I’ve been hard to reach for the past few days. I wish I could have been more communicative during this process, but unfortunately I couldn’t.
– Bankman Fried
In the following paragraph, Bankman-Fried emphasized that he has reached a non-binding agreement to purchase FTX with CZ.
What exactly does this mean? That’s a good question, and unfortunately I don’t have a perfect answer for you, as the details are still being worked out. We’ll keep you posted as we learn more in the coming days and weeks.
– Bankman Fried
Protecting its customers
The CEO of FTX emphasizes that it is a top priority to protect both customers and the industry.
We are optimistic that this will all work out, which means that we will soon be focusing on our second priority, the shareholders.
– Bankman Fried
Bankman-Fried’s last line indicates that there is uncertainty about customers’ money. He apologizes again and says:
I’m sorry I didn’t do better, and I’m going to do what I can to protect all assets and your investments.
The email comes after FTX experienced a massive run, which halted withdrawals on Tuesday. According to the latest statements from the CEO, the exchange is currently working to get rid of the withdrawal backlog.
While a Binance bailout may be in the works, FTX investors are still in an uncertain position. The deal appears to be currently uncertain, and the CEO’s statement that all customers’ funds are safe also appears questionable. In addition, Bankman-Fried has since deleted a remarkable tweet.
Now deleted tweet from SBF assuring clients that FTX could fully cover client assets pic.twitter.com/4YW8hbqE7Q
— Will Clemente (@WClementeIII) Nov 8, 2022
An important factor
The size of the gap to be closed will be one of the most important factors in deciding whether the deal will go through. Whether there will be an agreement can only be speculated. Analyst Lex Moskovski expects Binance to actually acquire FTX.
People who already have billions chase influence and admiration.
Not another billion or two.
Profit maximalism has diminishing appeal as capital grows.
So, unless something shady surfaces, I expect the Binance-FTX deal to come through as it brings exactly this, I&A.
— Lex Moskovsky (@mskvsk) Nov 9, 2022
Adam Cochran said the hole is likely much larger than initial estimates. According to his sources, there could be many other small funds that are worth nothing today.
Cohran added that there are a lot of rumors going around that don’t look good for FTX. “I’ve heard things from multiple secondary sources that I’m fairly confident in, but nothing has been confirmed. It now feels that there is a 70%-80% chance that the takeover will not go through. I think the chances are high that Binance will forgo it. However, I have also heard from someone I would normally trust that the deal will go through.”