Binance swallows rival FTX 🤯🤯🤯; Yet another causality of the struggling NFT market 😔

FinTech is Eating the World, 8 November

Hey Everyone,

Happy Tuesday! I was expecting today to be hot, but it went beyond my wildest expectations… Because of the size and the importance, today we’re looking at two stories - a trailblazer deal where Binance is going to swallow rival FTX (we haven’t seen anything like this before in crypto) and yet another causality of the struggling NFT market (and it’s not even a real winter yet!). Let’s jump straight into the burning stuff:

Binance swallows rival FTX 🤯🤯🤯

Industry BREAKING News🔥 Following a months-long clash between founders on social media, which escalated earlier this week, Binance agreed to buy rival cryptocurrency exchange FTX.

This is one of the biggest events in crypto ever. Let’s learn more and understand why.

More on this 👉 It’s not done until it’s done. It’s important to stress that Binance has signed a non-binding letter of intent (LOI) to acquire its most formidable rival FTX. In other words, this currently means very little as Binance could simply pull out of the deal at any time (more on that - below).

Furthermore, financial terms were not disclosed, and the transaction does not affect FTX US and Binance.US, which are two separate companies. That said, there will probably be little to no regulatory involvement (the US entity has been left out on purpose and it's FTX’s global entity we’re talking about here, so no one really cares and can care actually).

But to put in perspective how big of a deal it is, we must remember that Binance is the largest crypto exchange by far, with a trading volume of about $40B so far today. FTX is second in spot trading, with a volume of about $4B, as per CoinMarketCap data. Early this year, FTX was valued at $32B while Binance is valued at ~$300B.

Reading between the lines 👀 What really caught my attention was the way this acquisition was announced.

FTX founder and CEO Sam Bankman-Fried aka SBF first announced the news via Twitter. He positioned this as a strategic transaction with Binance:

SBF @SBF_FTX

1) Hey all: I have a few announcements to make. 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 (pending DD etc.).

Just 6 minutes later Binance CEO Changpeng "CZ" Zhao also used Twitter to confirm the deal. His announcement though was very casual. Not only did he say they just signed a non-binding LOI, he later added that Binance has the discretion to pull out from the deal at any time:

CZ 🔶 Binance @cz_binance

This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.

If I’m reading this correctly, it seems that FTX is being pushed into a corner with no way out apart from Binance bailing them out while Binance doesn’t really care apart from the fact that this announcement is expected to calm the markets down.

If the markets indeed calm down, I wouldn’t be surprised if Binance just walks away. FTX crashes and Binance wins without spending a penny.

Why this matters? 🤔 This is undoubtedly the biggest deal in the cryptocurrency industry this year and one of the biggest things in crypto since Bitcoin. The deal signals a power shift in the crypto world, which has been decimated by rising interest rates and investors’ retreat from risk.

Here’s a full breakdown of how it all happened, what it means for the crypto industry, what’s next + the takeaway: