Binance CEO Changpeng Zhao says that its tentative agreement to acquire rival crypto exchange FTX wasn’t a planned event.
In a memo sent to Binance employees, Zhao says that there was no “master plan” to acquire FTX and that FTX’s financial issues don’t bode well for the health of the crypto industry.
Zhao says that he didn’t know the extent of FTX’s troubles until Sam Bankman-Fried, the firm’s founder and CEO, contacted him to make a deal.
“We did not master plan this or anything related to it, It was less than 24 hrs ago that Sam Bankman-Fried called me. And before that, I had very little knowledge of the internal state of things at FTX. I was surprised when he wanted to talk. My first reaction was, he wants to do an over-the-counter deal, but here we are.”
Zhao also advises his employees not to buy or sell any FTX Token (FTT) or make any public comments on the deal until it’s officially done. He also says that employees shouldn’t view the purchase as a win for Binance.
“FTX going down is not good for anyone in the industry. Do not view it as a ‘win for us.’ User confidence is severely shaken. Regulators will scrutinize exchanges even more. Licenses around the globe will be harder to get. And people now think we are the biggest and will attack us more.”
News of Binance agreeing to potentially acquire FTX sparked volatility across the crypto markets as the industry saw nearly a billion dollars in liquidations within hours.
FTT, FTX’s native asset, saw a massive decrease, falling to a low of $2.90, nearly 95% down from its all-time high.
According to Zhao, there are two lessons other prominent figures in the crypto industry can learn from FTX’s collapse.
“Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don’t use capital ‘efficiently.’
Have a large reserve.”
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