This article is a continuation of the first part of the conflict between Binance and FTX, which can be found here.
Even though the risks that Alameda Research possessed through their massive exposure to FTT were unknown then, Changpeng Zhao got the opportunity he had been waiting for and acted.
As part of the ceding of the investor seat that I mentioned in part one, Binance received $2.1 billion from FTX in 2021 through FTT and BUSD…
CZ Zhao waited for the opportune moment
Along with the speculation on Twitter about the problems FTX is facing, a so-called small war has also started between the two CEOs of trading platforms Binance and FTX. Even though Sam Bankman-Fried tried to defend himself by accusing his opponents of spreading false rumors, it was CZ Zhao who had the last word.
Seeing the risk they were exposed to, Caroline Ellison, CEO of Alameda Research, tweeted a message trying to buy OTC (meaning off the market online) at $22, the FTT coins that Binance wanted to liquidate. Sam Bankman also asked other platforms to seek an amicable way, not conflict.
In any case, it was soon apparent to everyone on Twitter that Changpeng Zhao did not want to make peace. He further fueled the market's sense of fear by highlighting an on-chain transfer of FTT worth $584 million, posted by Whale Alert. CZ Zhao further compared FTX and FTT to LUNA and stated that he does not support market players who want to hurt him behind his back.
The Binance boss' post further fueled the negative market sentiment surrounding FTX's possible insolvency and contributed to the association of FTX with an anti-crypto entity. Not only that, but the post and the sold coins significantly impacted the price of FTT, causing it to suffer a decline of over 80% in a single day.
What can happen next with FTX?
The brilliant strategy that CZ Zhao showed with this attack proves that the Binance boss knows the situation in the crypto sphere very well at the moment. After months of large firms and entities becoming insolvent (we're talking about firms that were considered safe here), such as 3 Arrows Capital, Celsius, and Luna Foundation – crypto market participants are affected, both financially and financially well as psychically.
The most prudent move that small and large investors can make is withdrawing their funds from FTX, even if the platform is not genuinely insolvent. Ironically, an extremely high volume of withdrawals could prove the speculation.
Even if it turns out that FTX is not insolvent, this attack has taken a significant toll on them. The competition, especially Binance, stands to gain from these events.
What does the war between Binance and FTX mean for the crypto sphere?
The most obvious answer is that such a war could lead to insolvency for FTX. Also, considering the current prices in the crypto market, the consequences could be catastrophic.
There is a good chance that FTX will come out on top, but we know that the dice have been thrown between Binance and FTX. The end of this conflict is most likely far away, but the collateral impact it could create will affect all market participants.
