FTX Agreement with Binance(twitter.com) |
FTX Agreement with Binance(twitter.com) |
As a rule of thumb, about half of announced M&A deals don't happen.
FTX is a licensed money transmitter in many US states. In some states they need regulatory approval for an acquisition. Binance is headquartered in the Cayman Islands. Regulatory approval will not be easy to get. US bankruptcy courts will have a say, too. FTX acquired another bankrupt crypto company just two months ago, and the bankruptcy judge in that case may have something to say about it.
Bloomberg has a story.[1]
WSJ has a story.[2]
This is going to be a big mess.
[1] https://www.bloomberg.com/news/articles/2022-11-08/crypto-ex...
[2] https://www.wsj.com/livecoverage/stock-market-news-today-11-...]
FTX.us, a separate entity not involved in the transaction, is a licensed money transmitter in the US. US persons are not allowed to use FTX.
> FTX does not onboard or provide services to corporate accounts of entities located in, established in, or a resident of the United States of America, Cuba, Crimea and Sevastopol, Luhansk People's Republic, Donetsk People's Republic, Iran, Afghanistan, Syria, or North Korea. FTX also does not onboard corporate accounts located in or a resident of Antigua or Barbuda. FTX also does not onboard any users from Ontario, and FTX does not permit non-professional investors from Hong Kong purchasing certain products. [1]
[1] https://help.ftx.com/hc/en-us/articles/360042412652-Location...
* "FTX Trading LTD is incorporated in Antigua and Barbuda, and headquartered in The Bahamas."
* West Realm Shire Services Inc. - incorporated in Delaware.
CNBC now says that Binance is only trying to buy the non-US operations of FTX.
FTX.US terms say "Title to cryptocurrency represented in your FTX.US Account shall at all times remain with you and shall not transfer to FTX.US." Are US customers having Bitcoin withdrawal problems? If they are, that's theft.
[1] https://twitter.com/alex_valaitis/status/1589711035132694528
The right question is "where did all that money come from?"
Hint: their clients somehow can't withdraw their money...
Binance Announces Acquisition Of Distressed FTX After "Significant Liquidity Crunch"
Guess there's always a bigger fish...
Wait, was that ever finalized?
Can you provide some general examples of types of regulations that you'd like to see?
- starting state had FTX as insolvent, but had enough money to cover the withdrawals of their token (FTT)
- Binance CEO announces that they're going to dump all of their FTT because they don't trust the stability of it
- now there's a bank run, and people are making enough withdrawals to expose that FTX is insolvent
- FTX pauses withdrawals (because they don't have the cash)
- Binance bails out FTX by purchasing it
I don't understand it either to be clear. I know a little about crypto, a decent amount about finance but it does seem that the problem is not limited to FTX.
This might go down as an LTCM. Would be quite nice. Haven't had nerds setting fire to the financial system for a while.
The hedge fund, and thus FTX, had less money than they owed lenders and customers. FTX found a bail-out in Binance; otherwise everyone would have lost their money.
[1] https://www.coindesk.com/business/2022/11/02/divisions-in-sa...
[2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-...
It's a bit early to speculate on this one.
Imagine McDonald's makes its own money, let's call them clown-bucks, keeps most of it, and sells some to the market.
McDonald's then uses their remaining clown-bucks as collateral for actual loans.
And then people remember clown-bucks aren't real.
And then Starbucks comes and market sells the clown-bucks they were holding, while reminding the market that clown-bucks aren't really a thing.
McDonald's balance sheet is trashed, with their clown-bucks wiped out.
Anyway, that's what happened in crypto-land this week.
https://pbs.twimg.com/media/FhEKHDuVIAUfg7g?format=jpg&name=...
real bank - fdic protected for people. maybe fed govt bailout
ftx - bailed out by competitor Binance
They've admitted to illiquidity transforming into insolvency. That doesn't happen if you aren't betting client assets.
We’ve seen the balance sheet. The facts have been on the table for FTX as much as they are for Tether.
I can’t say when they will fail. But as soon as we saw the Alameda books and Alameda and FTX’s responses (the former, an irrelevant statement about other assets; the latter, a claim of solvency without proof), the endpoint was sealed. Insolvent, leveraged entities don’t pay out junior creditors absent a bail-out.