See related article: Binance officially backs out of FTX acquisition; latest updates and commentary
Binance founder Changpeng Zhao may have yanked the offer to buy the FTX.com cryptocurrency exchange of rival Sam Bankman-Fried after getting a look at the books, but deal or no deal, Zhao comes out on top, said industry officials.
Zhao, known as CZ in the industry, announced a non-binding agreement to acquire cash-strapped FTX.com on Wednesday, but pulled the offer on Thursday after running due diligence on the target and not liking what he found.
Justin D’Anethan, the institutional sales director at Hong Kong-based digital asset platform Amber Group, said CZ’s business is the winner in the whole affair. Binance, already the world’s biggest crypto exchange, will likely see a large inflow of trade with the possible folding of FTX, one of Binance’s largest competitors.
“All of the people who could move out of FTX, and other dodgy exchanges that they don’t feel comfortable with, will go to the bigger players and safer platforms, with Binance definitely emerging as one of those,” he said. “I don’t see the downside.”
Lachlan Feeney, chief executive officer and founder of Australian blockchain development agency Labrys Group Pty, expressed similar views.
“I think Binance is going to benefit from this massively regardless of whether they acquired FTX or not. FTX was either going to be owned by Binance, or it was not going to exist at all, so that market share has to be absorbed by someone,” said Feeney.
“It would have been better if Binance did buy it, from the perspective of the users getting bailed out and not losing their funds. But now we’re going to have a scenario where the users are not bailed out, they will lose their money, and Binance will still do quite well and will certainly soak up a lot of what was FTX as market share,” he added.
Binance tweeted on Thursday morning it was no longer planning to acquire FTX as a “result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”
“It seems now, CZ’s just gonna let the whole thing fall, and the FTX investors that have withdrawals that were paused or backlogged seemingly won’t get their money back in full,” said D’Anethan.
“FTX and (its crypto brokerage arm) Almeda Research is due to implode and send ripples through the crypto market… It’s really bad for the whole space,” he said.
However, there is one cloud for Binance in the scenario, he said. It may become a target of antitrust regulators because of its increased market dominance.
See related article: Binance’s pending acquisition of FTX may attract attention of antitrust regulators