FTX Collapses, FTT Price Drops by 75%: What Happened?
Dive in and learn how FTX lost the battle with Binanc and why is it dangerous for Crypto Owners?
FTX, the fourth-largest crypto exchange by trading volume, is on the brink of collapse, but likely was taken over by its main rival, Binance. Here’s who was hurt the most from this takeover and how we can prevent it from happening again.
FTX might be acquired by Binance: Background summary by GetBlock
Yesterday, November 9, 2022, Changpeng “CZ” Zhao, CEO and founder of the world’s largest crypto exchange Binance (BNB), confirmed that he has reached an agreement with FTX CEO Sam-Bankman Fried: Binance will Acquired FTX.
The deal marks a new phase in the conflict between Binance and FTX. In early November, CZ reported that Binance (BNB) would be selling its entire bag of FTT, which is the core asset of FTX.
Then the price of FTT began to drop: a representative of Alameda, an FTX-linked trading firm, offered to buy all of Binance’s FTT for $22 per token, but the offer was rejected. The FTT price immediately dropped to $11.
Amid rumors of bankruptcy, Alameda and FTX began aggressively selling their bitcoin and stablecoin holdings. In a panic, customers attempted to withdraw funds from FTX, but all withdrawals over $1,000 were stopped.
As the value of FTX and Alameda-related assets dropped, some DeFi protocols encountered imbalances: Abracadabra’s stablecoin MIM even lost its peg to $1.
The cryptocurrency market surged as soon as the deal was signed, but it appeared to be a dead cat leap: Within hours, Bitcoin fell below $17,500 and regained its two-year low.
Who is the worst sufferer of Binance/FTX drama?
At the same time, the deal could still be rejected: Binance has said that FTX will carry out all necessary due diligence procedures before the acquisition. The anti-monopoly department will also strictly examine the legality of this contract.
Meanwhile, users of retail cryptocurrencies have been hit the hardest by the crash. First, they are victims of centralization: FTX locks up their funds, and Binance could become a monopoly in this nascent market. As the saying goes, not your keys, not your coins.
Then due to clashes between giants, their holdings were quickly depreciated: FTT price, for example, is now down 95% from its ATH. Over 30% of all Solana ecosystem assets were lost overnight due to the blockchain being tied to the Alameda Corporation.
Last but not least, even holders of Bitcoin (BTC) and Ethereum (ETH) are under fire: the net capitalization of the crypto market has shrunk to $870 billion, the lowest since November 2020 Level.
Because of this, retail crypto adopters — even those who avoid centralized exchanges and invest in Alameda-related products and algorithmic stablecoins — are falling victim to yet another cryptocurrency tragedy.
Here’s how can GetBlock help
Decentralization is the way!
This is our purpose. Only on-chain applications are transparent and cannot be tampered with, and cannot be used for conflicts between Web3 enterprises. They greatly reduce the influence of the team and its ability to transfer user funds.
GetBlock has been providing dApps with reliable APIs for all major blockchains since 2019. We currently offer 50+ networks; shared and dedicated nodes are available to our customers.
For example, to start building on Solana (SOL), Web3 entrepreneurs can use our dedicated node API. In the meantime, those interested in riding another wave of Binance adoption can try the BNB chain and its shared and dedicated nodes.