Jn3oi2ncp9 in  
Software Engineer a year ago

What is happening with FTX and Binance?

can someone ELI5? Like, whats going on? It seems big and it's all over Twitter. Trying to get my feet wet in crypto/web3. ty 🙏

refer61614Software Engineer a year ago
tl;dr: Binance, a crypto firm, bought out its biggest competitor for a fire sale. For a true ELI5, I'll start with a few names and acronyms: Binance: Biggest crypto trading platform in the world CZ: Short for Changpeng Zhao, the CEO of Binance FTX: A crypto trading platform that grew super fast. They’re #2. SBF: Sam Bankman-Fried, the CEO of FTX FTT: A crypto token that was created by FTX. Its price is important because it is a large store of value for FTX. Binance also owns a large sum of this token. Alameda Research: A hedge fund that was run by SBF. They have a cozy relationship with FTX. Importantly, they own a lot of the FTT token as well. Moving on to what happened: FTX and Binance are sort of frenemies. Binance owns a large amount of the FTT token, but they are also competitors. Apparently, CZ said that SBF has been causing trouble for them with regulators. In retaliation, he says that Binance will dump its $2B worth of FTT token, causing the price to plunge. This gets people worried, and some folks start to panic sell. At this point, people are expecting Alameda Research to scoop up the cheap shares of the FTT token. That never happened because it seems that they didn't have the funds to. The price of FTT starts to fall faster because people are now panicking and pulling money out of the platform. With the value of the FTX firm having fallen so fast in a short period of time. Binance then comes in and “saves the day” by saying they will buy out the whole FTX firm. The result is a very cheap purchase by Binance of their competitor, FTX. The juicy bit is that the low purchase price was caused by Binance's actions.
Jn3oi2ncp9Software Engineer a year ago
ty 👶 🙌 This reminds me of that meme where two ladies are selling eggs and one ends up buying the others entire supply and then raises the price back up.