Bernstein: Binance-FTX Deal May Attract Antitrust Regulators’ Attention

The combined company would have a more than 80% share of the global crypto market, a report from the firm said.

AccessTimeIconNov 9, 2022 at 9:53 a.m. UTC
Updated May 9, 2023 at 4:01 a.m. UTC

Crypto exchange Binance would have a more than 80% share of the global crypto market if its agreement to buy rival FTX goes ahead, and that could attract the attention of antitrust regulators, Bernstein said in a research report Tuesday.

Binance agreed to buy FTX on Tuesday after its rival suffered a liquidity crisis. Financial terms of the deal weren't disclosed.

Bernstein notes that the FTX and Binance entities holding the non-U.S. business are offshore, but if FTX has investments in U.S. and European jurisdictions, it could give a reason for regulators in those regions to intervene.

“All eyes are immediately focused on the probability of the deal,” and any likelihood of it not completing is bearish for crypto markets, analysts Gautam Chhugani and Manas Agrawal wrote.

Due diligence will take time and involve determining if there is a shortfall versus customer funds, the report said. Binance also must check to see if there are any “wrongdoings from diversion of customer funds to related parties or unauthorized purposes.”

If there’s a hole in FTX’s balance sheet, “Binance would acquire FTX as a fire sale, by making whole the customers,” the note said, and investors may raise legal questions about FTX’s conduct and about any potential wrongdoing.

Earlier this year, FTX investors bought in at valuations of $18 billion and $32 billion in two consecutive funding rounds. That could be an “extremely disastrous outcome for investors,” because of FTX's balance sheet situation, the note said.


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Will Canny is CoinDesk's finance reporter.