Binance Is Strongly Leaning Toward Scrapping FTX Rescue Takeover [UPDATE] (coindesk.com) 27
Ian Allison, reporting for CoinDesk: Cryptocurrency exchange giant Binance is highly unlikely to go through with its proposed acquisition of struggling rival FTX after less than a day of reviewing the company, according to a person familiar with the matter. Binance's non-binding letter of intent for the takeover -- announced Tuesday as FTX's financial position appeared to be spiraling out of control -- hinged on Binance performing due diligence. Roughly half a day into that process of reviewing FTX's internal data and loan commitments has led Binance to strongly lean against completing the transaction, the person said. UPDATE: Binance has scrapped its letter of intent to buy rival crypto exchange FTX, according to a Binance spokesperson.
"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," the spokesperson told CoinDesk. "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," the spokesperson added.
"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," the spokesperson told CoinDesk. "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," the spokesperson added.
Scams and more scams! (Score:2)
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Yes. Most people are not doing crypto "the right way" as it is intended. It's still too hard and technical for most people. Centralized exchanges and other platforms make it easy, but then it kinda misses the point and vastly increases the risk.
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Yes. Most people are not doing crypto "the right way" as it is intended.
tl;dr; Yet another No True Scotsman fallacy.
Let me update my history of this fiasco (Score:5, Insightful)
So let me get this straight:
1. Binance craters their competitor's stupid fake money token thing by dumping it very publicly
2. Dumping their FTT causes the market to predictably take notice and also dump FTT, causing a run on FTX and putting them in a cash crunch
3. Binance then says they're buying what's left of FTX, probably for pennies on the dollar
4. Once they get a look at the books, they realize there's nothing but liability there
5. Binance then says they're probably not buying what's left of FTX, suggesting there's no value left at any price.
Doesn't spell good things for a "decentralized" financial market if competitors can just crush each other and leave the rotting corpses laying there. I wonder if there's a reason why we passed banking regulations in the 1930s...
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Exchanges aren't really a part of DeFi; in fact, one of the "killer apps" of DeFi are decentralized exchanges, which exist to help people end-run such stupidity. Exchanges feed off of two things:
1). No txn fees for on-exchange activity (not all DEX trades include fees but it's hard to interact with a DEX smart contract without paying a txn fee somewhere)
2). Access to ACH deposits/withdrawals. Sometimes. If the exchange is legal in your country and if your bank plays along.
Exchanges are still a vital onboa
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Many exchanges now issue their own block chain assets. Binance had one, Coinex has one, etc. The infamous USDT has its origin in Bitfinex.
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It also is a means to get your cryptocurrency out and into a spendable currency like Euros, dollars, yuan or whatnot. Not many people accept cryptocurrencies, so having to change to a "normal" currency is a must for many people.
Re: Let me update my history of this fiasco (Score:2)
Ftfy.
Happy Hodling.
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No, DEX is part of DeFi. Keep trolling though.
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Let me save you the trouble: de facto - Existing in actuality; In fact or in practice; in actual use or existence, regardless of official or legal status.
Also, I couldn't help noticing your handle. Couldn't you have chosen something MORE PRETENTIOUS than DR MR LORD ??
Some people like to shove "Reverend" in there, like how about DR MR LORD REVEREND X ??
there ftfy, no thanks necessary.
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Prior to Binance's dump, CoinDesk released a report indicating most of FTX's holdings were tied-up in FTX projects, While it was likely strategic on Binance's part, it was entirely justified in the current market.
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A shady exchange used customer deposits as collateral, and a US bank gave them loans to run their exchange like a hedge fund operation.
Your take is that "decentralized" financial markets are the problem...?
Do you think your bank is doing any different with your deposits after Glass-Steagal was removed? Don't you ever wonder why we had to bail out the banks in 2008? Cuz your deposits were in jeopardy as BofA leveraged 30 to 1 on your cash. Same-same, just too small to bail out here.
Deregulation is the pr
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Wait, what? (Score:5, Interesting)
Binance contribted to FTX's downfall by dumping FTT and provoking a death spiral of the token. If anyone wonders why Bitfinex reserves the right to refuse buybacks of USDT any time they choose, wonder no more.
In any case, Binance was in an excellent position to acquire FTX at a tiny fraction of its previous market valuation. FTX would have to have some truly putrid liabilities on their books to cause Binance to back off on what should have been a sweetheart of a deal.
Re:Wait, what? (Score:5, Interesting)
1. Binance buys FTX at pennies for the dollar, inherits a platform that does exactly what they did anyway and likely, as you say, some putrid liabilities.
2. Binance lets FTX go bankrupt, it disappears
Why would they choose #1? What are they acquiring that's worth anything? It's definitely not the fake currencies. Wouldn't #2 be the best competitive option? You get rid of a competitor AND you don't waste your energy trying to integrate a second company? The only reason would be if letting FTX fall creates massive loss of confidence in fakecoins, so much so that their main business is affected. However, maybe that'd happen anyway...
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In instance #1 there may be customers or a customer base that has value above the liabilities.
Most likely it's instance 2.
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FTX, like all exchanges, makes money with transaction fees. FTX had market exposure that Binance presumably did not.
Half a day? (Score:4, Interesting)
That's two coffee breaks, two meetings, 30 minutes looking at documents... if that's enough for a preliminary judgment, then FTX is fucked. Well and truly fucked.
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I think we already knew they were well and truly fucked when they went from being crypto-bro billionaire who put their company's name and logo on a football field at UC Berkeley [calbears.com] to having a 1930s style run on their "currency", to putting themselves up for a fire sale, to having the one prospective buyer who rug-pulled your company to begin with say "nah, we're good" in a span of two days.
That's a monumental collapse that even some totally failed political candidates from last night's election can appreciate
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It is scary how a company went from headlining ads in the Superbowl to this.
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Why is it scary? We all knew it was coming, and more of these implosions are coming too.
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You must have been in diapers during the dot-com crash. Not the same magnitude of losses, but adjusted for inflation and crypto hype, it's similar.
Re: Half a day? (Score:3)
Brb. Gotta make more popcorn.
centralized (Score:2)
This current crypto debacle goes to show just how centralized the thing called 'decentralized finance' really is, decentralization is a goal here but in practice things are very centralized and controlled by a few.
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Centralized exchanges are not really part of the "decentralized finance". Those who take decentralization seriously use an exchange to transfer their Fiat into Crypto and then move it into self custody from there.
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Still gotta have that centralized on-ramp somewhere, otherwise it's exchanging cash in a back alley somewhere hoping you aren't going to get mugged while you stand around waiting for the transaction to clear.