Big news: Binance plans to acquire FTX. What is the reason? What are the remaining obstacles? What are the subsequent impacts?

On the afternoon of November 8 (UTC+8), FTX's hot wallet suddenly became abnormal, with almost no coins transferred out for nearly several hours. At the same time, FTX US's hot wallet continued to transfer coins. Some people said: Is FTX about to issue an announcement (stop withdrawing coins)? Who knew that an announcement from the history department of the cryptocurrency circle was waiting for it.

Binance founder CZ said that this afternoon, FTX asked us for help. There is a severe liquidity crunch. To protect users, we signed a non-binding letter of intent to fully acquire and help deal with liquidity crunch. We will conduct a complete background check in the next few days. There is a lot to cover and it will take some time. This is a highly dynamic situation and we are evaluating the situation in real time. Binance has the right to exit the transaction at any time. As the situation develops, we expect FTT to be highly volatile in the next few days.

FTX founder SBF said that we have reached an agreement on a strategic transaction with Binance (pending DD, etc.). Our team is clearing the withdrawal backlog. This will eliminate liquidity crunch; all assets will be covered 1:1. This is one of the main reasons why we asked Binance to join. This may take some time to resolve - we apologize for this. But it is important that customers are protected. FTX US is an independent company and withdrawals are not affected.

Currently, FTX is the second largest crypto ecosystem after Binance (even surpassing Binance in many aspects), but suddenly due to a report about Alameda + Binance's sniping sale of FTT caused liquidity difficulties, it had to decide to sell the company to Binance in just a few days. This greatly shocked the global industry and will become one of the most important and influential events in the history of cryptocurrency.

Arthur, founder of DeFiance Capital, said that considering the short time required to complete the transaction, Binance is likely to acquire FTX for a nominal/negligible amount and assume all responsibilities (debts) of FTX. If I were an investor in FTX's previous round, I might start hiring a litigation lawyer now.

What prompted FTX to make such a surprising decision? There may be only one answer: FTX cannot meet the withdrawal needs of users, FTX misappropriated users' assets (for example, short-term debt and long-term investment), and may even have caused the inability to redeem at a large proportion. When the withdrawal demand cannot be met , the misappropriation of assets and even the deficit are relatively confirmed . SBF's parents are professors at Stanford Law School . He should be aware of the legal responsibilities that may be borne and the great impact on his personal reputation . SBF must not want to be the next SuZhu or Do Kwon.

Compared with 3AC Babel Celsius AEX Tiger, etc., FTX is actually not much different. The first moment it encounters a liquidity crisis is to demand external rescue. Therefore, there are many rumors in the market that "Wall Street" is the backer/backstage of FTX. This is also incomprehensible to the outside world. With the background and resources of SBF and its team, can't they find a white knight? We can only guess that time is too tight (no time for complex negotiations), the hole is too big (traditional institutions may not be willing to invest), and SBF's own decision (maximizing comprehensive interests and mutual understanding of the business) may be part of the reason for its existence.

Of course, there are still many unknowns as to whether the acquisition will be successful. The first is whether Binance's background check is successful, such as whether more problems will be found; the second is whether FTX will find other white knights while gaining time and confidence; the third is whether the US regulatory authorities and regulatory authorities in other countries will take action. Although in theory Binance and FTX have no US users, they are also under investigation by various US agencies. CoinDesk also pointed out that such an acquisition may violate antitrust laws.

If Binance successfully acquires FTX and SBF still holds FTX US and Alameda, what will be the impact? (Although it is too early to discuss it at present)

First, for Binance, the strongest competitor has been temporarily eliminated; OK Huobi Bybit KuCoin and others will also benefit, and global exchanges will be occupied by Chinese again. Competition will continue among Chinese people; secondly, SBF has great uncertainty in the future. Without FTX, we are not sure whether the Solana ecosystem it supports and the current FTX US and Alameda can still show strong influence in the industry; finally, Binance's rescue actually covered up the problems of FTX. What we expect to see better transparency and 100% reserve may not make great progress.