As you probably know by now, the other day, Binance CEO Chyangpen Zhao was saying that he is considering helping out FTX. After that, it seems that he changed his mind, which led to a massive crypto crash.
Binance’s CZ speaks out
The other day, we noted that Binance and FTX have been making headlines these days a lot. We revealed that some important announcements regarding the two entities have been triggering massive market movements today.
The crypto market is shaken by the latest announcements that have been made in the crypto space.
1) Hey all: I have a few announcements to make.
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
— SBF (@SBF_FTX) November 8, 2022
FTX founder Sam Bankman-Fried said the following:
“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that.”
After that, Binance seems that they changed their mind.
The prestigious publication CoinDesknoted that Binance is highly unlikely to go through with its proposed acquisition of struggling rival FTX.
This is pretty unexpected, and it comes less than a day of reviewing the company, according to a person familiar with the matter, as per CoinDesk.
Now, here’s the new tweet shared by the crypto exchange:
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
Binance continued and said:
“Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
According to Binance, as regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.
According to Zhao, there are two lessons other prominent figures in the crypto industry can learn from FTX’s collapse.
“Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don’t use capital ‘efficiently.’
Have a large reserve.”