Crypto winter doesn't appear to be going away anytime soon. A liquidity crunch caused a panic in the crypto market this week, almost approaching a total meltdown. Binance, the world's biggest crypto exchange, saved the day by buying its largest competitor: FTX
Sam Bankman-Fried (the CEO of FTX) reportedly blasted Binance to regulators. But “CZ” the Binance CEO had a few tricks up his sleeve that caused a huge run on FTX, which put it at the brink.
CZ sold $2 billion of FTT (the FTX coin) during the weekend. FTT fell 15% overnight. FTX's customers tried withdrawing over $6 billion in a matter of 72 hours. FTX did not have sufficient capital and outsiders worried that it could become bankrupt.
Three Arrows Capital was forced to file for bankruptcy in March by similar liquidity events. FTX is much bigger in scale. Some were concerned that FTX's failure could lead to an industry-wide meltdown like the one experienced by Lehman Brothers.
So Binance stepped up and saved FTX. Crypto investors aren’t happy that one the largest crypto firms was in danger of collapse. Yesterday saw Bitcoin and Ethereum close down 11%, 15% and 15% respectively.
Takeaway: Although we knew that the crypto market was volatile, FTX almost caused a total collapse. FTX was founded in 2008 to bail out struggling crypto firms, but it now sees itself on the other side of the table. Who knew that while FTX was bailing out other companies, it was actually leveraging itself to the max. CZ made sure that he thoroughly rubbed it in SBF's face: