The CEO of Binance says that the decline of FTX is “not good for anyone” and warns of increased regulatory scrutiny

A day after the largest exchange in the world signed a non-binding agreement to acquire its most formidable rival firm, Binance founder and CEO Changpeng Zhao said that FTX’s “going down is not good for anyone in the industry” and that the ongoing episode has “severely shaken” the confidence of consumers.

According to Zhao, the sudden liquidity crunch at FTX will cause regulators to look more closely at other cryptocurrency exchanges. In other words, getting a licence anywhere in the world is going to be more difficult. And now that they know we’re the biggest, they’ll keep attacking us,” he wrote in a note to staff on Wednesday, before tweeting the news to the world.

Employees of FTX were also asked by the billionaire, who is widely regarded as the most powerful man in crypto, not to trade FTT, the company’s native token. I ordered that we as a company cease all sales activities. In fact, we do have a bag. Okay, that’s fine. Moreover, he emphasised the importance of maintaining standards even higher than those found in financial institutions. Since last Tuesday, the FTT token’s value has dropped roughly 70%, to around 4.8.

Binance, one of the world’s largest cryptocurrency exchanges, surprised everyone on Tuesday by announcing that it had signed a letter of intent to acquire FTX, a company that has been in business for three years. According to Zhao, the decision was made after Sam Bankman-Fried, CEO of the FTX exchange, which has been operating for three years, reached out to Binance for assistance.

Initially supported by Binance, the largest cryptocurrency exchange in the world, FTX’s relationship with this investor began to sour as the younger company gained traction. The value of FTX, which was estimated at 32 billion in a financing round earlier this year, is likely to take a major hit. The companies involved have not disclosed the terms of the deal.

Zhao announced earlier this month that Binance would be selling its holdings of FTT, the native token of FTX exchange, that it had received as part of an exit from the firm last year, bringing the relationship between the two executives to a new low after months of back-and-forth snark.

Zhao stated that the company was selling off its FTT holdings as “post-exit risk management,” lending credence to rumours about Alameda Research’s financial stability. Both Alameda and Bankman-Fried had previously dismissed worries like these.

The founder of Binance has claimed that he did not “master plan this” deal or “anything related to it.” And they strongly suggested that workers not consider this a “win for us.”

“SBF called me less than 24 hours ago. Additionally, prior to that, I knew very little about the inner workings of FTX,” Zhao explained. I could do some quick mental math to estimate their sales, but it wouldn’t be very precise. That he even wanted to talk caught me off guard.

The estimated value of Binance, the largest cryptocurrency exchange in the world, is over 300 billion. After a Series C funding round in January, FTX was valued at 32 billion. Many prominent investors have put money into the company, including Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, Bond, and Iconiq Growth. According to Web3 Signals, a cryptocurrency dealbook, FTX and its subsidiary FTX US raised over 2.2 billion across multiple funding rounds.

Though the crypto community had become accustomed to unexpected turns of events this year, Tuesday’s announcement still caught everyone by surprise. Earlier this year, after purchasing several floundering crypto companies, Bankman-Fried was heralded as a crypto saviour. The cryptocurrency exchange’s venture capital arm, FTX Ventures, has made significant investments in a wide range of cryptocurrency startups, such as Aptos Labs, Messari, Sky Mavis, LayerZero, YugaLabs, and 1inch Network.