Published för 1 år sedan • 4 minute read

Explaining the FTX Binance Deal Collapse

Binance had offered FTX the hope of a bailout and acquisition, but this offer was withdrawn only a day after the world’s largest crypto exchange CEO Changpeng Zhao had announced that Binance had reached a nonbinding agreement to purchase the embattled exchange. No value was ever announced for the proposed package, but in the previous quarter, FTX was valued by private investors to be worth in excess of $30 billion. The failure to materialise a deal from Binance left Sam Bankman-Fried’s crypto exchange and his whole empire on the verge of collapse.

What’s Happened Exactly? 

Binance announced their decision via tweet “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, But the issues are beyond our control or ability to help.”

Sam Bankman-Fried had already previously made a last-ditch attempt to solve his company’s liquidity crunch by making efforts to realise funds from venture capital firms or investors. This was underway before he approached Binance. The news of the failure to materialise an offer was accompanied by alleged investigations ongoing by US agencies, along with questions raised over possible mishandling of customer funds.

This situation left Sam Bankman-Fried with few options; the stricken exchange faced an estimated shortfall of $8billion in unfulfilled withdrawal requests.

The earlier announcement that Zhao made to the effect that Binance was selling its FTX native tokens was a landslide moment, but Zhao had already communicated to his employees that Binance did not “master plan” the collapse of FTX, going further he explained, “FTX going down is not good for anyone in the industry”.

What’s Happened to FTX?

Recently FTX announced that they were collapsing following the resignation of their CEO. Some financial experts have said this crash is in part due to a lack of regulation in the crypto industry for companies like FTX, unlike how governments regulate casinos, the gambling industry and the best slot sites.

The topic of regulation within the Cryptocurrency industry is always one that is open for discussion. Many like the unregulated nature of digital currency and as such would not welcome any form of stringent regulation. However, many feel as though some sort of regulation in place would have kept people’s money safe, even if the platform didn’t collapse and from that point of view it can only be a good thing. 

It certainly doesn’t help that many people have lost money and that there have been accusations that Sam Bankman-Fried removed money from FTX and transferred it to another of his companies, which has also recently collapsed. Many feel that this should not have been able to happen and it could be that a form of regulation would have helped prevent it. 

Chapter 11 Bankruptcy

FTX has now entered into chapter 11 bankruptcy proceedings which will be overseen by the US courts. A chapter 11 bankruptcy is unique in enabling a stricken company to re-profile assets and realise capital for their creditors. 

Cryptocurrencies have plummeted amid the deal turmoil, with Bitcoin falling 15% on Wednesday after a 13% drop on Tuesday. It’s trading below $16,000 for the first time since November 2020. Ether, meanwhile, has plunged more than 30% over the past two days and is close to falling below $1,000.

Although it would be easy to assume that the collapse of one platform wouldn’t affect the whole Cryptocurrency industry, the truth is that for many investors it has dented their confidence. With investors feeling that their investments may be unsafe, many have withdrawn from their existing platforms so that they don’t fall victim to the same fate as those that had their investments safely stored in FTX. 

What Is Binance Saying?

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help. Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market. As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”

What Does This Mean For the Future?

With Cryptocurrency already experiencing a winter – where values are expected to go down and stay down rather than bounce back most investors would have hoped that something like this could have been avoided. However, it has happened and therefore investors need to decide how this is going to affect their future investment prospects. 

As you might imagine with a topic such as there are different opinions on what people’s next move should be and the viability of Cryptocurrency in the future. If you are considering making an investment of this type then carrying out your own research and working out what is best for you and your needs is always the best route forward. Most financial experts are in agreement that although Cryptocurrency isn’t likely to make a quick recovery the long-term prospects are much more positive, so if you’re looking for somewhere to invest your money long-term then it is still an option to be considered. 

The truth is that we haven’t been in this situation before and as such, it is hard to predict what will happen in the future. However, if you are looking to make a quick buck with a fast-moving investment then Cryptocurrency has been something to stay away from for a few months now and the collapse of FTX and the Binance deal falling through has only cemented these feelings future for most seasoned investors. 



The views, the opinions and the positions expressed in this article are those of the author alone and do not necessarily represent those of or any company or individual affiliated with We do not guarantee the accuracy, completeness or validity of any statements made within this article. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author. Any liability with regards to infringement of intellectual property rights also remains with them.


Inga kommentarer än... Sätt igång konversationen!