Why Alameda Bankruptcy Might Be Certain Following Binance FTX Acquisition

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Last Updated on November 9, 2022 by Bitfinsider

The Binance FTX acquisition is expected to proceed. Changpeng “CZ” Zhou, founder and CEO of Binance, said that the company will buy FTX.com in its entirety. Sam Bankman-Fried, founder of FTX, has also verified the transaction. However, other experts feel that the Binance FTX transaction will almost certainly result in Alameda’s insolvency.

The CEO of Binance, CZ, announced that the company would sell all of its FTX tokens FTT. According to reports, Sam Bankman-trading Fried’s company, Alameda Research, has a substantial exposure to FTT tokens. Out of the $14 billion in assets owned by Alameda as of June 30th, more than $3.5 billion in FTT tokens were unlocked. Sam Bankman-Fried also founded the FTX cryptocurrency exchange.

Due to the relationship between FTX and Alameda, there was a large sale of FTT tokens. CEO of Alameda Caroline Ellison attempted to soothe market turmoil. She offered to purchase Binance’s FTT holdings for $22 as well. However, experts quickly suggested that this offer was due to Alameda’s $22 FTT hedge. Fears of FTX and Alameda’s insolvency began to circulate in the cryptocurrency world.

CZ disclosed that Sam Bankman-Fried and FTX sought assistance from Binance. He also disclosed that FTX is experiencing a significant liquidity crisis. Therefore, Binance will buy FTX, one of its largest competitors, in its whole. In addition, SBF confirmed the transaction.

Experts note that FTX’s request for assistance from Binance indicates that FTX has a massive hole in its balance sheet. Other significant investors were unable to assist FTX in filling this void. Binance is exclusively acquiring FTX, however. Consequently, Alameda’s obligation to FTX continues.

FTX token FTT has decreased by 73% in the past twenty-four hours. This will undoubtedly worsen Alameda’s balance sheet strain. Experts anticipate that Binance will collect all of Alameda’s outstanding liabilities. This will likely result in Alameda’s insolvency.

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