From the announcement, Binance is not definitively buying FTX. They've agreed to discuss acquisition and do due diligence. Which means finding out how deep a hole FTX is in before proceeding.
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.
> FTX is a licensed money transmitter in many US states.
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]
* "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.
I don't know much about any of this, but clicking around in twitter I came across this interesting thread from only 20 hours ago, about FTX and Binance being "at war" with each other [1].
FTX was *throwing* money at everything moving in the crypto space. Where the heck did all the money go? Did they just spend VC money as long as they could and ran out now? Or did all the money disappear through the Alameda pipe? I really hope that there will be an investigation into the whole thing. Liquidity crunch my a**.
Can you explain this comment, I don't see democrats as being bought in crypto? What would giving them money accomplish? Most politicians in both parties are very skeptical of all this crypto tulipmania. There are a very small number who seem to bought in. Republicans are in that group too.
SBF put $10 million this summer into an Oregon Democratic primary in an attempt to advance a candidate sympathetic to Effective Altruism, rationalism, and AI ethics to the US House (the candidate lost). SBF has in general been flashing a lot of cash over the past 2 years in order to become a major philanthropist in the EA space.
Thanks for explaining that, I hadn't hear that specific thing. So he was the one that made that bizarre donation. I'd heard about the candidate out of no-where, didn't know SBF was behind it or who he was before a few days ago - I thought it was another Peter Thiel candidate purchase.
This makes the FTX acquisitions of Celsius etc extremely suspicious. FTX themselves may have been at risk of going under when three arrows went under. Clearly there was some level of dishonesty about their exposure.
Some elements of the crypto space may not need to be regulated, but centralized exchanges should be regulated as hard as banks and should regularly undergo liquidity stress tests. If FTX does turn out to be insolvent, execs should be getting more than a slap on the wrist
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.
Can someone explain why FTX created their own token in the first place? Was it just a way to raise money/distribute equity without dealing with stock market regulations?
Why does anyone create their own token? Once you get people using it, then you can just "print more" and make yourself incredibly rich. Creating wealth out of nothing but people like your foobar token and they will convert other tokens to/from it. You can sell it to sell fake equity (without usual oversight) in a company too.
FTX bet customer funds through the CEO’s hedge fund on an FTX token [1]. The token price fell when this was revealed [2].
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.
What it actually revealed that they embezzled customer funds? It's still speculation as far as I can tell (your sources say nothing about customer funds)
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.
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-...]