Binance bought FTX, a company that was worth $32 billion several weeks ago. KevinTDugan writes on how FTX CEO Sam Bankman-Fried is the latest crypto billionaire to be taken out by a rapid collapse in the digital markets
showing that most of the fund’s money was a digital token issued by FTX, Bankman-Fried’s exchange. There were other questionable revelations: How did Alamedato have $5 billion worth of the FTT token when the total market was just a little over half that? The fund owed more to others than it had in forms of money not created by Bankman-Fried.
Because this is crypto, it all starts to get complicated fast, but the main problem boils down to the same one behind every bank run. No exchange — not even Nasdaq or the New York Stock Exchange — keeps enough money to pay everyone if all investors pulled their money at once, and FTX was no different.
Enter CZ. It turns out that last year, Bankman-Fried had bought back Binance’s stake in FTX and paid the company more than $2 billion using tokens issued by FTX and Binance. Regardless of the actual dollar amount, CZ now had the means to tank FTX. On November 6, the Binance founder essentially signaled that he had no confidence in the Bankman-Fried operation and would start selling off the FTT token — the very one that Bankman-Fried had used to buy back shares of his own company from CZ.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash . Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
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