Binance are divorcing FTX.
Imagine your partner comes to you and says:
"I want a divorce - but I want it to be amicable...also, I'm selling everything we own."
This feels a little bit like that.
If you didn't know, Binance (the worlds largest crypto exchange) were investors in FTX (one of the largest exchanges in North America).
When Binance cashed out of their FTX investment, they actually sold their shares back to FTX for $2.1B - $500M of which were paid in FTT tokens (FTX's native cryptocurrency).
And now Binance are looking to sell all of those FTT tokens - which has already started to dump its price (dropping 9.5% in a day).
...ok, but why?
Binance CEO, Changpeng “CZ” Zhao, said:
"Regarding any speculation as to whether this is a move against a competitor, it is not.
Our industry is in its nascency and every time a project publicly fails it hurts every user and every platform."
As to the actual reason why they're selling, he was ahhh - pretty cryptic - saying it was:
"Due to recent revelations that have came to light"
CZ, you sly dog - leaving us on a cliff hanger!
Here's how this could damage FTX, beyond lowering the price of its FTT token:
FTX has a venture arm called Alameda Research - which uses FTT tokens as collateral for a lot of its loans.
If the value of FTT drops too much, Alameda's lenders are going to want them to make up the difference.
And if they can't do so, their loans are going to be called - which could trigger a death spiral of liquidations as lenders lose faith in Alameda's ability to repay their debts.
...let's hope it doesn't come to that.
