There is fire at FTX, and it is not its competitor Binance who will finally act as a firefighter on duty.
This failure coupled with uncertainty around the future of FTX has led to a 20% loss in value for Bitcoin and 25% for Ethereum over the past five days.
From uncertainty to catastrophe, what will be the future of FTX?
Of the ” unfounded rumors on the financial health of the FTX crypto platform repeatedly denied by its CEO Sam Bankman-Fried, to uncertainty about the very future of FTX, there has been only one step in recent days. Better to have your belt well hung if you are a customer of this crypto platform. While a takeover of the latter by Binance, the number one crypto market in terms of volume, seemed plausible, a backpedal occurred on the evening of November 9, 2022.
Initially, Binance positioned itself from a letter of intent while, quite logically, wishing for an inventory of FTX, but the potential buyer was quickly disillusioned. In a statement as brief as it is violent for FTX customers, Binance does not go overboard and expresses that ” The problems [rencontrés par FTX, ndlr] are beyond our control or our ability to help “.
Binance did not want to go beyond the traditional due diligence process, also citing ” the latest on mismanagement of client funds and alleged investigations by US federal agencies “. It must be said that Sam Bankman-Fried would not seek less than 8 billion dollars to avoid sinking.
Bitcoin and Ethereum react strongly to uncertainty
A huge sum which should avoid FTX a potential bankruptcy if it returns to its coffers, according to its CEO, but difficult to know more about the real state of FTX’s finances. In its press release, Binance explains that one of its original intentions when attempting to buy was indeed to “ provide liquidity to support FTX customers “.
In a tweet posted as early as November 8, 2022, Binance CEO Changpeng Zhao seemed to cite a major drag on FTX’s takeover by the latter’s propensity to use its own tokens as collateral and obviously take out loans without have sufficient reserves to honor them.
If many points are still to be clarified concerning the management of FTX, these uncertainties are logically not the business of the holders of crypto-currency assets. Bitcoin temporarily fell below $16,000 between 9 p.m. and midnight on November 9, 2022, for a value comparable to mid-November 2020. Ethereum has lost more than $400 over the past five days, slowly stemming its fall on November 10 in the morning.
Sources: The Verge, Bloomberg
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