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Comment by twblalock | Hacker News Reader

I'm not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state internally that it made sense to sell his holdings in FTT. I could buy the idea that he wanted to hurt FTX with his tweet, but things quickly escalated out of control.

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 But that offer had to be withdrawn because things got so bad.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.

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And also: at the time of Binance's offer to buy FTX, it makes sense only if Binance saw significant contagion risks to FTX's failure. But then they got a little closer and saw the huge hole in FTX's balance sheet and decided that they couldn't do that either. So it's really the worst outcome - they signal that FTX is important to their own business, but then can't do anything to save it. Does not seem to be good news for Binance.

Binance already knew that there was a hole there. They had just triggered the bank run by calling it out. The attempt to bail out FTX later was only for saving face and maybe also because they freaked out but couldn't stop it at that point.

And if they didn't know how large the hole was, they must have gotten a pretty good idea before signing the LOI. Even if it was rushed, surely that would be the first question they ask.

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".

> not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state

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.

Acc to their press release Binance did know that they were insolvent, just not to what degree.

Personally, I think they would have known the size of the hole as well, and never intended to go through with the buyout

Perhaps he thought the block hole was a billion and found out it was 5/10/20/100 billion?

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