5 months ago 1 min read

Why the Binance-FTX Deal May Cause Alameda Bankruptcy


The acquisition of Binance FTX is expected to proceed. Changpeng "CZ" Zhou, founder and CEO of Binance, announced that the company will fully purchase FTX.com. Sam Bankman-Fried, the creator of FTX, has also acknowledged the agreement. Some experts, however, think that Alameda might almost certainly go bankrupt as a result of the Binance FTX acquisition.

Reason Why Binance is Purchasing FTX

According to a tweet from Binance CEO CZ, the business will liquidate all of its FTT and FTX token holdings. According to reports, Sam Bankman-trading Fried's firm Alameda Research is heavily exposed to FTT tokens. As of June 30th, more than $3.5 billion in FTT tokens have been unlocked out of the $14 billion in assets that Alameda was holding. Additionally, Sam Bankman-Fried founded the cryptocurrency exchange FTX.

The intimate ties between FTX and Alameda led to a significant decline in the value of the FTT coin. Caroline Ellison, CEO of Alameda, made an effort to reduce market turbulence. She also proposed to pay $22 for Binance's FTT holdings. Experts soon asserted that this offer was made possible by Alameda's hedging of FTT at $22, nevertheless. The crypto community started to worry about FTX and Alameda going bankrupt.

Sam Bankman-Fried and FTX requested assistance from Binance, according to CZ. He also disclosed that FTX is experiencing a significant financial shortage. As a result, Binance will completely buy FTX, one of its main rivals. The transaction was also confirmed by SBF.

Why Alameda Might Become Bankrupt

According to experts, the fact that FTX asked Binance for assistance indicates that FTX has a significant hole in its balance sheet. Other significant investors were unable to cover that gap for FTX. Binance, meanwhile, is only buying FTX. As a result, Alameda is still liable to FTX.

FTT, the FTX coin, has decreased by 73% during the past 24 hours. This will probably make Alameda's balance sheet even more vulnerable. According to experts, Binance will demand payment from Alameda for every outstanding debt. As a result, Alameda might become insolvent.

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