FTX bankrutt?

Binance will not go ahead with the proposed deal to acquire FTX unless the US-based exchange partner FTX.US is part of the deal, according to a source with knowledge of the matter and text conversations reviewed by Blockworks.

According to the source, the fact that the Federal Trade Commission and Commodity Futures Trading Commission have opened investigations into FTX this morning means that Binance will not consider a deal for FTX’s standalone operations. The price of the deal was originally $1, according to materials seen by Blockworks, but “no one is gonna want to buy billions of dollars of messy debt for $1”.

Legal advisors to the deal are however concerned that US regulators would block any sale of a US entity to Binance, given that Binance has multiple open investigations of its own — including one involving The Department of Justice and the IRS, which opened an investigation into Binance in 2021, and another in which the CFTC was reported to be examining whether Binance users based in the US had access to derivatives trading.

Binance was asked by federal prosecutors in 2020 to hand over communications involving Zhao, as they sought to discover whether the exchange was in violation of the Bank Secrecy Act.

And just last week, Reuters reported that Binance helped facilitate close to $8 billion of trades in Iran, possibly in violation of US sanctions.

A second person with knowledge of the matter explained that “100% if they try to sell FTX.US to Binance, regulators will say f**k off.”

Alameda Research (his trading firm)