I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.
Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.
If this was planned in advance, it was not 4D chess, it was just a really bad plan.
It seems clear from CZ's public announcement of a $2b FTT dump that their intention was to destroy FTX and Alameda. So my theory is that the LOI was a trap to put a nail in the coffin, destroying any remaining trust in FTX.
Before they were merely starting rumors; the phony acquisition attempt let them declare "we've seen the books and FTX is unsalvageable".
FTX could have just been illiquid. With a lot of loans to other crypto players who would do fine if FTX were rescued. Turns out, they weren’t. They were fundamentally insolvent.
Personally, I think they would have known the size of the hole as well, and never intended to go through with the buyout
Instead of quietly selling off their holdings over time, the CEO tweeted their intention to sell and triggered a death spiral.
Binance didn't benefit by announcing it either. The token dumped before they liquidated, and they didn't scoop up their competitor.