Forty-eight hours ago, many of Silicon Valley’s most respected VC firms would probably have considered big bets on crypto exchange titan FTX to be some of their more prescient investments. Now, in a wild turn of events, that bet may have soured—and not only for FTX investors.
Crypto exchange titan and venture capital darling FTX shocked the industry on Tuesday when Changpeng Zhao (CZ), the CEO of FTX’s rival and the world’s largest crypto exchange by volume, Binance, announced his company signed a non-binding letter of intent to acquire FTX.com (it would exclude FTX.US) following a whirlwind past couple of days. Swirling rumors over the weekend that FTX was on shaky financial ground culminated in a rush of withdrawal requests on Monday that overwhelmed the platform. The liquidity crisis left FTX desperately searching for investors to fill its deep financing hole, which was reportedly up to $6 billion on Tuesday, Semafor reported. By Tuesday late morning, FTX founder and CEO Sam Bankman-Fried’s company was on the brink of collapse—and CZ saw an opportunity to consolidate power by agreeing to acquire FTX in what would amount to a fire sale.
