Binance and FTX battle: Everything you need to know about the current crisis

The tension between Binance and FTX exchanges in the last few days led to another havoc in the digital currency market. A crisis that resulted in the price of Bitcoin reaching $15,600 and causing a 90% fall in the value of the FTT token. In the following, we will examine the process of the battle between Binance and FTX and how this crisis was formed.

November 2 – Disclosure of significant amount of FTT on Alameda’s balance sheet

To Report According to Cointelegraph, the crisis began on November 2, after reports that the balance sheet of the company founded by Sam Benkman Fried, Alameda Research, was leaked. The balance sheet information showed that the company held a significant amount of FTT, the native token of the FTX digital currency exchange.

The release of the news that a major trading firm was holding a large amount of an asset raised concerns in the cryptocurrency community and raised questions about the relationship between Alameda and FTX.

November 5 – Transfer of significant amount of FTT token to Binance

The Whale Alert Twitter account, which monitors major transfers of such digital currencies, informed its users on November 5 that nearly 23 million FTT tokens worth more than $584.5 million had been transferred to Binance.

At that time, this amount was about 17% of the circulating supply of FTT tokens.

November 6 — Alameda’s CEO explains the balance sheet

Alameda CEO Caroline Ellison tweeted on Nov. 6 that the disclosed balance sheet doesn’t tell the whole story. He pointed out that this balance sheet, specifically, was only for a subset of our corporate entities and did not mention the existence of other assets valued at more than $10 billion.

This balance sheet shows part of our biggest buy (long) positions; Obviously, we have investments to hedge that haven’t come here.

Due to the shrinking credit space of digital currencies this year, we have paid back most of our loans so far.

November 6 – Binance FTT token sale

Shortly after, Binance CEO Chang Peng Zhao announced on November 6 that his exchange would sell all of its FTT holdings, citing the recent revelations (referring to Alameda’s balance sheet).

Binance has about $2.1 billion of Binance USDA and FTT since the FTX divestment last year, Zhao said. However, it did not disclose the total amount of FTT tokens held by Binance.

He added that he will sell the tokens in a way that will have the least impact on the market, adding that he expects it to take several months to sell all the tokens.

Zhao also confirmed that the transfer of nearly 23 million FTT tokens on November 5 was part of the Binance settlement.

Contrary to the conflict on Twitter, Binance’s CEO later added that the move was just post-exit risk management, pointing to lessons learned from the Terra Luna collapse and its impact on the market.

November 6 – Alameda’s CEO offers to buy Binance FTT tokens

Shortly after Binance announced its FTT token sale, Ellison tweeted to Zhao that Alameda would happily buy them all for $22 per token.

November 7 – FTX raids begin to withdraw assets

As the news and rumors spread, FTX users began withdrawing their holdings from the exchange for fear of bankruptcy, and analysts urged those who had not already done so to withdraw their cryptocurrencies from FTX.

Data from the Nansen report on November 7 showed that the value of stablecoins withdrawn from FTX reached $451 million in 7 days. Meanwhile, users started reporting slow withdrawals from FTX. The exchange also assured users that everything was going well while handling withdrawal complaints.

November 7 – Sam Benkman Fried asks Zhao for cooperation

Shortly after the exchange addressed users’ concerns, Bankman Fried posted a series of tweets saying that the competitor was trying to knock us down with false rumors. He also added that FTX and asset conditions are good.

He claimed that the exchange has sufficient capital to cover the payment of all client assets and that FTX does not invest client assets. Rather, it has processed all withdrawals and will continue to do so.

Bankman Fried claimed that FTX had $1 billion in extra cash and asked Zhao to work together for the ecosystem.

November 7 – Zhao rejects the offer to buy Alameda

Responding to a question on Twitter, Zhao indicated his disinterest in going through with a deal previously proposed by Ellison to buy Binance’s FTT assets for $22 per token, saying:

I didn’t say that. It was a question, not a commitment to do a deal. I think we will stay in the free market.

We still keep our Lunas to this day.

November 8 – FTT price crash and cryptocurrency markets

Some analysts have warned of a significant drop in the FTT token price since November 7 (November 16) due to a series of announcements. In the early days of November 8 (November 17), the FTT price dropped by about 30% and within a few hours, it reached $22 to $15.4.

The price of Bitcoin also began to decrease due to the fear of the destruction of the FTX exchange.

November 8 – FTX agreement with Binance to solve liquidity crisis

In a shock announcement, Bankman Fried said on November 8 that FTX had reached an “agreement on a strategic transaction” with Binance to help cover what he called “liquidity crunch”.

He added that all assets will be covered on a 1-to-1 ratio, and this is the main reason why FTX asked Binance for help.

Shortly after the announcement, Zhao also said that Binance had signed a non-binding agreement to buy the FTX exchange. He also noted that they reserve the right to back out of the deal at any time.

November 8th and 9th – Sam Bankman Friday deleted the tweet accusing Binance

Late on November 8, just hours after announcing the deal with Zhao, Bankman Fried deleted a tweet that accused Binance and claimed that FTX and its assets were in good condition.

The websites of FTX Ventures and Alameda, the exchange’s venture capital arm, were taken down on November 9, while unconfirmed reports of FTX staff resignations circulated in the past day.

Also, on November 9 (November 18), reports were published about Binance’s possible withdrawal from the agreement.

November 9 – Binance officially withdraws from the deal

Less than 48 hours after Zhao’s initial announcement that Binance would buy FTX, the exchange announced on November 9 that it was no longer looking to buy FTX.

As a result of evaluating the company’s eligibility, as well as the latest news reports about the misappropriation of customer funds and the alleged US agency investigation, we have decided to withdraw from the potential purchase agreement.

Referring to reports of misuse of clients’ funds and investigations by the US agency, this exchange added:

Solving these problems is beyond our control or ability to help.

November 9 – Falling prices in the digital currency market

The digital currency market reacted to this news and by creating fear in investors, the price of Bitcoin reached its lowest level in recent years, $15,600. Of course, analysts expected further declines and believed that the price of Bitcoin could fall as low as $12,000.

November 9 – Sam Bankman Fried’s $8 billion funding request from investors

On November 9, reports surfaced that Sam Bankman Fried had requested $8 billion in emergency funding from investors to cover the liquidity crisis caused by user withdrawals over the past few days.

According to these reports, Bankman-Fried is looking to collect 4 billion dollars from investors and plans to finance the rest of the funds needed to pay customers by borrowing and even selling their personal assets.

November 9 – FTX website warning about deposit and withdrawal problem

The FTX website went down for about 2 hours on November 9 (Aban 18), and when it came back online, it warned users not to make deposits; Because the exchange is not able to process withdrawals.

This warning was also confirmed in a pinned post on the official FTX Telegram channel. The manager of that channel said that digital and fiat currency withdrawals have been affected and it is not clear when the issue will be resolved. He also added that there is not enough information about the current situation.