The Democrat’s newest megadonor Sam Bankman-Fried was forced to try and sell the crypto exchange he founded to his biggest rival on election day.
Bankman-Fried initially had a non-binding agreement that Changpeng Zhao, the leader of competitor Binance, would acquire the company.
This was after FTX saw around $6 billion of withdrawals within 72 hours.
Sam Bankman-Fried, the CEO of crypto exchange FTX considered the Democrats’ “newest megadonor” ahead of the 2022 midterm elections, reportedly saw around $6 billion of withdrawals within 72 hours before Tuesday morning, forcing him to sell the company to its biggest rival on Election Day.
Reuters reported that Changpeng Zhao, the leader of competitor Binance, said the company signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange. The stunning bailout came about as American voters simultaneously went to the polls.
“This is a truly crazy event in startup world. Dot-com bust level event,” tech reporter Eric Newcomer tweeted of the sale.
Binance has now backed out of its plans to acquire the company.
Binance is backing out of its plans to acquire FTX, the company said Wednesday, leaving Sam Bankman-Fried’s crypto empire on the verge of collapse.
The reversal comes one day after Binance CEO Changpeng Zhao announced that the world’s largest cryptocurrency firm had reached a nonbinding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis. Earlier this year, FTX was valued at $32 billion by private investors.
Here is the full statement from the company:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.
In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.
As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”
FTX was also turned down by other rival crypto exchanges, Coinbase and OKX.
They now either need to find a new buyer or file for bankruptcy.
Now that Binance indeed has backed out, FTX will need to find another way to fill what could be a $6 billion (or greater) hole in its balance sheet. This could mean finding a new buyer. This could also mean bankruptcy.
Filing for bankruptcy, though, is a lengthy process that doesn’t guarantee all creditors will be repaid. While some of the big-name venture capital firms like Sequoia, SoftBank, and Tiger Global Management, likely will be prioritized, smaller FTX investors could lose out.
Is this what happened?
So WSJ says FTX had $16b in customer assets, and they gave $10b to Alameda who blew it all…
— db (@tier10k) November 10, 2022
Bankman-Fried was the second biggest left-wing donor in 2022 behind Soros.