This Is What Binance’s Victory Over FTX Means

GM, everyone. Things went from 0 to 100 REAL quick. Take a deep breath and let's do this… A LOT happened. Therefore today's newsletter is a bit longer.

Today's events:

• Binance To Acquire FTX
• Selected Meme of The Day
• Bite-Sized News

BINANCE TO ACQUIRE FTX

Imagine buying the latest iPhone only to find out later the same day that they're releasing a new version of it tomorrow.

Well, that's how we felt yesterday. CZ probably waited till we published our newsletter, so that he could drop the biggest news-bomb of 2022 immediately after.

So yeah. We talked about how the FTX vs Binance situation is getting tense. And 20 minutes after posting it… News broke that Binance will acquire FTX. Well, what you gonna do.

There were wayyyyy higher losses experienced yesterday by someone. We're looking at you SBF. But let's start from the beginning.

The Clash of Crypto Titans. The Game of Crypto Thrones.

That's how it felt like yesterday. Like something big is about to happen.

Analysts, traders, crypto whales, newsletter authors (literally us) shared their comments and insights about how the CZ vs SBF battle is not good for the entire industry.

But then the reality hit.

Crypto Exchange Binance to Acquire Competitor FTX. Such headlines suddenly were on everyone's timelines.

The series finale arrived in the first episode.

But despite that…today the crypto market is DOWN. Global crypto market cap is below $900 billion for the first time since January, 2021.

Bitcoin is down. Ethereum is down. Aptos is down. Red color is all over the place. And it's the result of panic and uncertainty that was spread after a crypto giant got slain.

What happened?

Yesterday, It began with reports about FTX restricting withdrawals on their platform. And frozen withdrawals… are never a good sign.

The withdrawal problem followed the rumours about FTX's liquidity problems.

To put it shortly, they used their own token (FTT) as collateral for actual loans. Then financial reports made this info public.

Everyone realised that in case of FTT going down, FTX might get insolvent.

A few hours passed… And suddenly, there's a Binance flag over the FTX castle. Twitter users see this tweet pop up in their feed posted by SBF:

"Things have come full circle, and FTX.com's first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com'.

Twitter immediately responded with memes like this:

Shockwaves were sent down the market.

Some people were understanding. They thought that this kind of a move required bravery and humbleness. Here's what user named @AutismCapital (yeah, we know) said:

"Very proud of the maturity of this. Not dragging customer assets into the battle. Swallowing ego and making the correct strategic decision to continue building and competing. Good job, Sam."

To be fair, in his thread, SBF made it clear that 'the most important thing is that customers are protected'. He also thanked CZ and denied rumours about Binance and FTX having a conflict.

Nevertheless… Not everyone was convinced.

Essentially, SBF was running an insolvent exchange, and pretended that everything was fine.

In addition, he lied about the financial health of his company.

Twitter user @ledgerstatus shared an eyebrow-raising screenshot of a now-deleted tweet to prove it (thus the low quality image):

SBF's Downfall

It's not only the battle for the digital asset market and reputation that SBF lost. He saw his personal pocket get really thinner.

Following this bombshell-of-a-news, FTT, the FTX's token, jumped off the cliff, and saw its value drop over 80%.

At the moment of writing it's worth over $4. Just a few days ago it was worth over $25.

And this had its effect on SBF's financial status. Sam Bankman-Fried's net worth decreased by 93%. Bankman-Fried's Bank got Fried.

This translates to him losing $16 billion in one day. So… how was your day at the office?

Prior to this, SBF was listed #41 on Forbes Billionaires List. He was the second richest crypto billionaire after CZ.

Things have changed. "Is This The End For Sam Bankman-Fried?", asks yesterday's Forbes article.

Well, SBF's financial state was reduced around $991 million. Well... that's enough to pay one's rent. Here's what Vitalik said about it:

Industry Reacts

Coinbase CEO, Brian Armstrong, tweeted that he has 'a lot of sympathy for everyone involved in the current situation'.

But then was quick to make sure that Coinbase is NOT like FTX:

As they say… When you face a crisis, you learn who your true friends are. It turns out that Coinbase is definitely not FTX's bestie.

Circle (issuer of the USDC) co-founder Jeremy Aller stated that they never lent money to Bankman-Freed's companies:

"Circle has never made loans to FTX or Alameda, has never received FTT as collateral, and has never held or traded a position in FTT", he said.

Tether's CTO Paolo Arduino echoed the sentiment and distanced themselves from the exchange. Suddenly, everyone turned away from FTX.

Except for CZ of course. He merged Binance with FTX. And emerged as the winner. The most important, and influential figure in the digital assets market.

He became the one who knocks.

In a proud, and victorious manner, CZ posted two big lessons that everyone should learn from this:

P.S. SAFU stands for Secure Asset Fund for Users, Binance's reserve fund that would be used in case of a crisis.

What's Next?

Now the real challenge is to contain the domino effect.

Solana, which was the second largest token on Alameda's balance sheet - is also falling…

Why?

And all tokens that Alameda has invested in… Will suffer, as Alameda cashes everything out. Massive sell-offs on the way.

So, concerning Solana… 50M SOL (worth more than $1 billion) will be unstaked in less than 20 hours.

And the number is constantly increasing.

The circulation will see a massive dump of new coins that are later going to be liquidated.

Another thing is… Risk from regulators.

After the defeat of FTX, regulators may begin to tighten enforcement of blockchain companies.

Such crashes as Luna, and FTX during the course of one year… Angry voices will be heard.

It is even possible that there will be more voices calling for a ban on cryptocurrencies.

Well, life goes on. And there's always some humour in almost everything. So let's end this on a more positive note.

Check out this screenshot from an actual FTX ad:

SELECTED MEME OF THE DAY

BITE-SIZED NEWS

• Swiss Watch Firm Rolex Files Application for NFTs and Crypto-Related Trademark. Relax and Rolex.
• Crypto Exchanges Coinbase and Kraken Experience Connectivity Issues. What a day. Problems all over the place.
• Abu Dhabi Introduces Middle East, Africa & Asia Crypto & Blockchain Association. We're sure they'll steal the headlines with the stuff that they're yet to come up with.
• OFAC Unveils Tornado Cash's Ties with DPRK and Its Nuclear Weapon Program. It's a matter of National Security. Or is it?