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Comment by microtherion | Hacker News Reader

> Binance was threatening to dump a huge amount of FTT tokens on the market. FTX has a big+vulnerable position in FTT. FTX asked Binance to sell them the tokens for a fixed price, so as not to crash the FTT token price. Binance declined

This makes absolutely no sense and is not how markets work. If FTX was actually willing to buy unlimited FTT at a given price, Binance could not have "crashed the price" by selling below that price — somebody would simply have bought at the Binance price and sold to FTT at their price.

What seems more likely is that FTX extended that offer only to a small portion of the tokens that Binance wanted to sell (to maintain the fiction of their price).

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My assumption when reading the quote was that it would be an off-market transaction.

Similar to how stocks can be traded in Dark Pools outside of the regular stock market.

Their point is that if you have the money to buy $1.1B of something off market, you should also have the money to buy $1.1B of something on market. Any time someone posts an ask at or below $22, you simply fill the order.

beyond the fact that the dynamics of saying "we'll take everything at a certain price up to $1.1B" will likely lead to much more than that showing up on the market and leading to a price crash anyways... I imagine that an off market transaction can involve things like not sending $1.1B in cash to the other person the same day.

If you have enough assets, everything can show up, and you just buy them out.

It's describing an arbitrage opportunity. If person A wants to buy something for $5.00, and person B will only sell for $1.00, I stand to make $4.00 per unit by simply being a middleman for the transaction. Private or public markets, the arbitrage opportunity remains the same.

FTX was not actually willing to buy, they are suffering from reduced capital position so they were bluffing

> reduced capital position

Sounds like a euphemism to me.

Alternatively FTX was confident they could make the purchase given time, but did not have the funds on hand.

Moreover, you are assuming no one else decides to sell based… one could argue publicizing their plans was meant to encourage just that…

I think what happened is that the probably wanted to buy it with their balance sheet rather than $$ which explains why this is a liquidity crisis. Say they have a $2bn in value (crypto, company assets, etc...); they can't place market orders to buy the FTT on the open-market; but they can make an off-market deal with Binance to swap these assets.

I think maybe FTX just doesn't have the money and their bluff was called

Another problem is the bank run that this narrative created.

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