Hello folks. It is Election Day in the U.S., and that was going to be my main focus today, up until about 11:05 a.m. ET anyway. That’s the point when Sam Bankman-Fried announced that his company FTX would enter a “transaction” with Binance, which Binance CEO Changpeng Zhao later clarified was a letter of intent for Binance to acquire FTX.
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The fall of an empire
WELL, today has been a day. I had a whole election thing planned, but we’re not going to know what’s happening for a while anyway – so instead, I’m going to refer you to the links below to catch up on today’s news. CoinDesk will have a live-blog kicking off at about 8:00 p.m. ET to monitor for major moves and results.
Why it matters
FTX was a huge player. According to CoinGecko, as of this morning FTX was the fourth-largest exchange by volume. Sam Bankman-Fried was a huge donor during the midterm elections and was a leading voice on some legislation. He might still be, but his company going from being “fine” to signing a letter of intent with Binance over the course of two days might have some long-term ramifications. We’ll have more on this in the coming days, but for now catch up on the last … week? the last week of this chaos here.
Breaking it down
This whole thing started last week when my colleague Ian Allison reported that Alameda Research, a trading firm founded by Bankman-Fried and tied to FTX, held a remarkable number of FTT tokens on its balance sheet. FTT is the token issued by FTX.
Here’s what happened next:
We’re going to need some time to figure out the implications. Bankman-Fried personally was a major donor this past election cycle (and sprung to prominence on the back of major donations in the 2020 election). A political action committee backed by Bankman-Fried is even rumored to be the next main super PAC to receive President Joe Biden’s blessing in the next election cycle.
There's also regulatory implications. FTX US Derivatives (formerly LedgerX) has a number of CFTC licenses, and FTX famously applied to try and settle derivatives directly, which the CFTC has yet to rule on.
Changing of the guard
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See ya’ll next week!
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