FTX files for Chapter 11; BTC price crashes along with FTT price plunge.

2022 11/13

2022-11-12 2022-11-13

On November 9 to 10, bitcoin briefly broke below $17,000 due to the FTX incident stemming from the FTX exchange. On a weekly basis, it has also fallen below the line where it should not be broken. I will try to summarize what is going on regarding the cause of this.

What is the FTX incident?

FTX is a crypto currency exchange based in the Bahamas. It is one of the fastest growing exchanges, with a Japanese subsidiary, and is a sponsor of the powerful F1 team Mercedes.

Binance’s CZ Announces Acquisition

The announcement that Binance would acquire FTX was momentarily boosted by CZ himself tweeting…

This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ 🔶 BNB (@cz_binance) November 8, 2022

Abortive buyout

However, at the acquisition stage, information leaked that Binance was abandoning the acquisition due to its very poor financial condition.

FTT prices plummeted

The price of FTT, the FTX token, fell by more than -93%.

BTC crashed as well.

Following the FTT, BTC also fell sharply. The price drop was extremely large recently, dropping $4,800 in a short period of time.

Trouble between Binance and FTX

However, there were various problems between Binance and FTX behind this.

The following seems to be the process until the acquisition was abandoned. Someone has summarized it in detail. Here is a tweet in Japanese.

Binance vs FTX戦争まとめ(1)

1) Binanceは2020年頃からFTXを支援していた（資本投下等）

2) しかし2021年の上昇相場で台頭してきたFTXに危機感を抱き始める

3) FTX創業者のサムは仮想通貨界への規制を自社有利に進めるには有力政治家を抱え込む事が最重要と考える
— TJ – Tokyo Japan Ocean Sailor (@CryptoIntellig6) November 8, 2022

Summary in English

As a result, it seems that the Binance side has developed a credibility problem with FTX, since they appear to be willing to acquire FTX, but then decide against it.

Binance to support FTX around 2020
FTX to grow rapidly in 2021
FTX Founder Sam Makes Political Contributions to U.S.
Abuse of FTX’s own assets
Exhausted balances available for withdrawal
Sam consults Binance CEO CZ
Binance announces acquisition of FTX
Binance leaks fraudulent financial information on FTX subsidiary
Binance announces it is selling FTX Governance tokens
FTT crashes
BTC also crashes

Withdrawals also suspended at FTXJapan

The FTX incident has also had a significant impact on FTXJAPAN, the company’s Japanese subsidiary, suspending customer withdrawals of virtual currency and also suspending withdrawals in Japanese yen.