Binance-FTX Botched Acquisition: A Timeline of High-Profile Bailout That Never Happened

Binance initially nurtured FTX. Today, it is being speculated as a reason for FTX’s imminent vanquish. This makes a great tale. But its CEO assured the community that he had no idea of the internal happenings of FTX.

He even went on to say that “FTX going down is not good for anyone in the industry” and tried to bring the regulators into the picture, who are already wary of the industry and are closely monitoring the fiasco.

With the exchange’s fall from grace and Sam Bankman-Fried losing his credibility, let’s look at the timeline of how the events unfolded.

  • In 2017, Changpeng “CZ” Zhao, a Chinese Canadian who moved to Vancouver in the late 1980s, founded the cryptocurrency exchange Binance.
  • In the same year, SBF launched private trading and venture capital firm focused on digital assets – Alameda Research.
  • Bankman-Fried co-founded – FTX – along with another MIT alum Gary Wang two years later. Alameda incubates FTX while Binance invests an undisclosed amount to the then derivatives exchange.
  • In 2021, Binance announces selling its share of FTX after the latter secured $900 million in funding.
  • FTX emerges as one of the biggest contenders raking in a significant market share of centralized crypto exchanges.
  • SBF’s popularity soars amidst the raging bull market. The MIT physics grad was even called “the next Warren Buffett.”
  • Terra crash aftermath further elevates Bankman-Fried’s position as bailout “messiah” after helping struggling lender BlockFi. He announces buying Canadian crypto asset trading company Bitvo in addition to the assets of Voyager Digital.
  • The first signs of crack began to appear in August 2022 when Sam Trabucco stepped down from his position as co-CEO of Alameda.
  • As FTX grew bigger, SBF became increasingly active in United States’ regulation. So much so that the exec was one of the largest donors in crypto and was the second largest donor to US President Joe Biden. Data suggest that he had spent nearly $40 million primarily backing Democrats during the current political cycle.
  • The following month, FTX.US – the US arm of FTX – came under investigation by the Texas State Securities Board for its alleged involvement in unregistered securities offerings.
  • SBF’s popularity was hit hard after a draft of the Digital Commodities Consumer Protection Act (DCCPA) was leaked to the public. The exec had championed the bill, but it was widely rejected by the community. Many experts consider DCCPA to be a “DeFi Killer.”
  • In November, Alameda’s balance sheet was largely made of FTX’s native FTT token surfaces. The trading firm was found to be holding more than $3 billion worth of FTT on its balance sheet.
  • Amidst insolvency concerns, Binance CEO confirmed the transfer of $584 million worth of FTT. He further revealed that the move was intentional and was part of a liquidation process. Without naming FTX, CZ said he won’t “support people who lobby against other industry players behind their backs,” perhaps remarking about FTX’s close relationship with the regulators.
  • Caroline Ellison, CEO at Alameda Research, offered CZ to purchase FTT back at $22 and claimed that the firm had $10 billion in assets that weren’t reported in the leaked balance sheet.
  • Ellison’s assurance failed to dispel the ongoing FUD. Subsequently, investor withdrawal of FTT intensified and the sell-off crashed the price of the token by over 80%.
  • Soon after this, Alameda started offloading Solana (SOL) to defend FTT’s price.
  • SBF then took Twitter to clarify that the FTX and the assets were fine, however, the exchange pausing certain withdrawals created more panic.
  • Hours later, the exec announced that FTX would be acquired by Binance, which was later confirmed by Zhao.
  • On November 9th, CoinDesk reported that Binance is strongly considering pulling out of the proposed acquisition after reviewing FTX’s finances.
  • Binance and CZ confirmed the report. Since then, new reports have emerged claiming that FTX’s entire legal team quit, the exchange needs $8 billion to stay afloat, and that Justin Sun could become its savior.
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