In the mostly unregulated world of cryptocurrencies, the past few days have been turbulent, with mudslinging on Twitter, a startling takeover effort for an exchange that later failed, and falling token values.
The largest exchange in the world, Binance Holdings Ltd., planned to purchase struggling rival FTX.com on Tuesday. On Wednesday, Binance pulled out of the agreement, citing FTX’s financial issues as well as potential regulatory inquiries. With its decision to leave, the continuing crypto bear market got much worse, sending Bitcoin to its lowest point in two years.
Although cryptocurrency may appear to be a specialised area of finance, the feud between two of its prominent figures has upended the industry and is likely to have far-reaching effects.
What are FTX and Binance?
They are two of the main cryptocurrency exchanges, which serve as markets for the purchase, sale, and storage of tokens by investors. By a significant margin, Binance is the largest cryptocurrency exchange by volume, and FTX is among the top five, according to cryptocurrency data company CoinMarketCap (which is owned by Binance).
The 30-year-old with curly hair, who was formerly a trader at Jane Street, supported floundering initiatives including BlockFi, Voyager Digital, and Celsius up until a few weeks ago. He included investors including the Ontario Teachers’ Pension Plan, Temasek, and the Softbank Vision Fund.
What caused their breakup?
Binance made an investment in FTX, a derivatives exchange, back in 2019. The next year, Binance introduced its own cryptocurrency derivatives and swiftly rose to the top of the market.
As the two corporations adopted increasingly different strategies with regulators, tensions grew. While Bankman-Fried was testifying before the US Congress, Binance was reportedly under regulatory investigation all around the world.