In the words of Dylan LeClair, Co-Founder of 21st Paradigm, "I personally assign a ~10% chance that CZ follows through on the deal. You're telling me CZ is going to want to acquire an insolvent exchange where he has to make things whole? Sure."
Binance is reportedly considering terminating its acquisition deal with FTX less than a day after signing a non-binding LOI to “save” FTX from a liquidity crunch.
Changpeng Zhao earlier claimed that Binance will conduct due diligence on FTX. After examining FTX’s balance sheet and loan commitments, Binance is now "highly unlikely" to go through with its plan to purchase FTX, with the community speculating that Binance has spotted "holes" in FTX's balance sheet.
Lucas Nuzzi, the Head of R&D at CoinMetrics, reported the findings of his investigation into FTX on Twitter. After examining the transactions that occurred on September 28, he noticed that the ICO contract of FTX Token (FTT) sent $4.19B worth of FTT assets to Alameda Research. Further investigation revealed that Alameda Research immediately sent these tokens back to FTX.
Lucas alleged that Alameda Research may have faced bankruptcy in Q2 2022, with the firm only surviving until now thanks to secure funding from FTX. He added,
“The Alameda bailout likely put a dent on FTXs balance sheet to the point where it was no longer solvent. This would have been fine if the price of FTT didn't collapse and a bank run ensued.”
The amount of deficits or “holes” in FTX’s balance sheet is currently unknown, with many speculating that they lie in the $3B to $5B range.
