GM. This is the Milk Road, the crypto newsletter that pairs perfectly with your morning coffee.
It's the Breakfast of Champions.
Here's what we got today:
- Binance is acquiring FTX
- Meme of the Day
BINANCE IS ACQUIRING FTX
Pardon the french. But WOW.
In case you haven’t heard...
Binance has entered into an agreement to buy FTX. And it's rumored that the acquisition price for FTX was $1🤯
Here's a 120-second summary of the atomic bomb that just went off in crypto:
In this edition, we’re gonna cover…
1/ How FTX (a multi billion dollar co) almost died overnight
2/ Why this is a god tier strategic move by CZ
3/ WTF happens now
HOW THIS ALL STARTED
To give you an idea of how it all started, let me tell you a little story...
Growing up, I loved playing basketball. Especially against my little brother.
I was bigger, faster, and stronger. So every time we played, I won. It was amazing. I was King of the Court.
But then one summer, my "little" bro grew 8 inches. He started hitting the weight room, and all of a sudden he was bigger & faster than me. And damn could he shoot the ball.
I never won again. And that's why I write a newsletter and no longer play basketball.
In this case, Binance was me and FTX was like my little bro. In 2019, Binance became an early investor & partner in FTX.
Binance was bigger, faster, and stronger than FTX early on.
But then FTX grew. And boy, did they grow fast. They went from no revenue to $1.2b in 2 years and acquired over 15 other companies.
SBF became the famous "Fro of Crypto" and crypto's golden boy.
Naturally, things started getting competitive between Binance & FTX. So they decided to mutually part ways.
Binance cashed out its investment by agreeing to take $2B. A lot of this was in "FTT" -- a token that FTX created that it uses for trading fees.
Everything was fine.
But then two days ago, CZ came out and said SBF has been talking sh*t about Binance to regulators.
So he announced publicly to his 7m Twitter followers that he was going to DUMP his entire $2B FTT stash.
Now, you don’t need to be a rocket scientist to know that would seriously hurt the price of FTT.
It caused panic. Sellers started selling and buyers were... nowhere to be found. No one wanted to touch FTT with a 10-foot pole.
The price crashed 35%+ overnight.
Then things got worse...
FTX saw huge withdrawals. Everyone and their momma tried getting their money from FTX ($6b+ in net withdrawals over the last 72h)
More rumors swirl that Alameda sold $BIT tokens, breaching a 3-year agreement that they wouldn't.
FTX had more red flags than an NFL Sunday.
People continued to panic and question whether FTX was gonna make it. If they had financial strength, they would have shown it by now.
And at this point, there’s still been NO word from SBF or the FTX team. (wtf)
Then this morning, withdrawals got paused. (double wtf)
Everyone was going crazy over social media trying to figure out what happened.
Then the news hit... FTX is entering a "strategic transaction" with Binance. (triple wtf)
Strategic transaction? That's gotta be the best code phrase since...
A few minutes later, CZ cleared up the news for everyone with his announcement.
"FTX was in trouble. We bought them to save them"
Talk about going full circle. Binance basically started a rumor, made a threat, and ended up buying its biggest competitor overnight.
Turns out FTX was playing checkers, while Binance was playing chess. Checkmate.
Now, the drama is over. And it looks like the crisis has been averted, for now.
SO, WHAT'S NEXT??
This is the big question on everyone’s minds.
If I knew what was about to happen, I wouldn’t be writing a free newsletter. Yet here we are 😂
But in all seriousness, there are a few things to think about...
1) It sounds like the deal is nonbinding. Which means that Binance can look under the hood and then decide not to do the deal.
Binance has all the leverage in this world and FTX has none.
2) The deal is all about FTX, not Alameda Research (FTX’s sister trading arm). That means there’s no knight in shining armor coming. If they collapse, we’ll see ripple effects for a while (they've borrowed big money from numerous protocols & companies).
3) Secondary effects. There are other assets that could see negative effects from this:
- Solana (which SBF famously backed the truck up to buy at $3) has dropped from $32 to $24 today
- Robinhood - SBF owns 10% of the company so we’re watching that closely too
- Crypto VCs - It's rumored that FTX's investors haven't received any word about the deal from FTX. (VCs like Sequoia & Paradigm have both invested $400m+ into FTX recently)
4) SBF's future
There's a saying... IF YOU COME AT THE KING, YOU BEST NOT MISS
And for a moment SBF was the King.
- Was saving companies going bankrupt
- People viewed him as the JPMorgan of crypto
But CZ did not miss. And now SBF is the one that needs saving.
How the tables have turned...
I don’t know about you, but I need a drink right now. And if you made it this far + you’re staying in crypto no matter what happens next, you probably deserve a drink too.
Hit reply with “I’m staying” and we’ll pick 5 people to get a drink on us.
TODAY'S EDITION IS BROUGHT TO YOU BY BRAVE
If there’s one thing I have in crypto it’s having multiple wallets for multiple chains.
Ethereum. New wallet.
Solana. New wallet.
You quickly go from 2Chainz → 2Walletz. And It’s a pain. But we found a solution to it all…
Brave Wallet - the only wallet you need to manage your crypto across more than 100 chains, including Ethereum, Solana, L2s, and more. All without downloading risky extensions.
It’s easy to set up and removes the headache of jumping between wallets and extensions. It’s packed with features like:
- built-in token swap
- fiat on-ramps
- support for hardware wallets like Ledger
- live market data, NFT portfolio management, and much more
Brave has one mission: to make Web3 easier to navigate and use for its 55m+ users. And they’re doing just that.
MEME OF THE DAY
— Yuno (@yuno0Zy)
Nov 8, 2022
That's a wrap for today. Stay thirsty & see ya tomorrow!
If you want more, be sure to follow our Twitter (@MilkRoadDaily)
What'd you think of today's edition?
Milk Roader prediction of the year.
VITALIK PIC OF THE DAY
Even Vitalik needs a drink after today
— The Milk Road (@MilkRoadDaily)
Nov 8, 2022
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.