Binance FTX repurchase agreement is ready to pass. Binance Founder and CEO Changpeng “CZ” Zhou has confirmed that the company will fully acquire FTX.com. Founder of FTX Sam Bankman Fried also confirmed the deal. However, some experts believe that the Binance FTX deal may lead to almost certain insolvency for Alameda.
Why Binance Acquires FTX
Binance CEO CZ tweeted that the company will sell all of its FTX FTT token holdings. Reports pointed out that Sam Bankman-Fried’s trading company, Alameda Research, was heavily exposed to FTT tokens. As of June 30, of the $14 billion in assets held by Alameda, more than $3.5 billion were unlocked FTT tokens. Sam Bankman-Fried is also the founder of the FTX crypto exchange.
The close relationship between FTX and Alameda resulted in a massive sell-off of the FTT token. Alameda CEO Caroline Ellison tried to calm market volatility. She also offered to buy Binance’s FTT holdings at $22. However, experts were quick to suggest that this offer was due to Alameda having covered the FTT at $22. fears of insolvency for FTX and Alameda have started to swirl in the crypto community.
CZ revealed that Sam Bankman-Fried and FTX asked Binance for help. He also revealed that FTX was facing a severe liquidity crisis. Therefore, Binance will fully acquire FTX, one of its biggest competitors. SBF has also confirmed the transaction.
Why Alameda May Become Insolvent
Experts point out that FTX asking Binance for help means FTX has a giant hole in its balance sheet. Other big investors couldn’t help FTX fill this hole. However, Binance only acquires FTX. Therefore, Alameda’s liability to FTX remains.
The FTX FTT token has dropped 73% in the last 24 hours. This will likely exacerbate the stress on Alameda’s balance sheet. Experts believe that Binance will extract all unpaid liability from Alameda. This will result in potential insolvency of Alameda.
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