Explainer: What happened to FTX

And just like that, one of the world’s most valuable crypto exchanges has fallen.?

What happened:?Changpeng Zhao (CZ), the billionaire behind the world’s largest crypto firm Binance took over FTX , its biggest rival, in a fire sale brought on (at least in part) by his own stir-the-pot media statements.

You’re probably wondering how we ended up here…?

Before FTX (led by the “king of cryptocurrency” Sam Bankman-Fried) became a household name, Binance was an early investor in the company before offloading its stake. The deal involved accepting $2 billion in FTX-created tokens, FTTs.?

• FTX grew, and Binance became a friendly competitor, all while sitting on billions in forgotten FTT tokens.
• These were mostly used like a points system within the FTX platform and didn’t draw much trade volume.?

But three days ago, CZ tweeted he would dump every last penny of the tokens after SBF (who’s largely pro-crypto regulation) showed support for a?proposed bill?that has been seen as a threat to decentralized finance, including Binance.?

The value of FTT began to fall?which would not be so bad?if SBF’s hedge fund Alameda, which is linked to FTX, didn't hold most of its assets in the token.?

• Investors freaked out and?started withdrawing money?from FTX (fearing the platform would collapse), threatening liquidity and the overall company.?

Bringing us back to where we started:?“Binance started a rumour, made a threat, and ended up buying its biggest competitor overnight,”?tweeted Shaan Puri.?

Why it matters:?The acquisition?is a stunning fall for one of the largest and most trusted crypto brands and will consolidate more industry power under Binance.?

• It's also bad news for Canada's third-largest pension plan, Ontario Teachers Pension Plan, which?invested in FTX?at a $25 billion valuation last year.?

What’s next:?More details will emerge in the coming days, but Binance has signed a non-binding agreement to acquire FTX to “help the company?with liquidity.”?