One of the worst events in crypto history: what analysts and traders say about the FTX acquisition and what it is fraught with

On November 8, the crypto world was shaken by the news of the takeover of the third-largest exchange FTX by Binance. Of course, regulators can still block the deal. If the agreement to buy the competitor goes through, Binance will have more than 80% of the stake. And that would attract regulators, according to the Bernstein Research report. However, many consider it one of the darkest events in crypto history.

Against this backdrop, bitcoin fell to its lowest level since 2020, down to $17,000. Ether was down to $1,228. The native token FTX (FTT) plummeted 77% to $2.56 and the Binance coin (BNB) dropped in value to $300.7. And prices continue to fall, including on lesser-known tokens.

Why was the FTX sold?

Initially, there were rumors that FTX and corporate brother Alameda Research were facing a liquidity crisis. There were concerns that Alameda Research’s balance sheet was overly dependent on illiquid tokens, including FTT.

CoinDesk noticed on Nov. 2 that almost all the assets of the trading firm Alameda are FTTs, which the crypto publication’s analysts called non-liquid.

Binance’s CEO then ratcheted up the pressure by saying he planned to sell his stock of FTT tokens. The announcement came a day after network data showed that Binance had already transferred its FTTs to the tune of $584 million.

Fearing a repeat of the Terra LUNA collapse, the smaller players started getting rid of their FTX crypto exchange coins.

FTX turned to Binance for help, and the parties signed a letter of intent to acquire FTX to help deal with the liquidity crisis. 

Traders are shocked

If you still have FTX funds, they’re gone

A huge loss

Sad and ironic

Every day I read about crypto, I understand it less and less

FTX wasn’t the first, and certainly isn’t the last

This is one of the darkest days in crypto history

Three of the worst events in crypto happened this year

FTX has no crypto

Now crypto exchanges are planning to implement Proof-of-Reserve

The story with FTX and its tokens was very educational. The Binance CEO wrote that you cannot use your own token for collateral, and you cannot borrow funds if you own a cryptocurrency business. Therefore, Changpeng Zhao (CZ) believes that cryptocurrency exchanges should use Merkle Tree-based Proof-of-Reserve, for full transparency of their collateral.

The initiative has already been supported by Kucoin, Huobi, OKX, and Gate.