​Real Vision CEO explains the impact of Binance’s deal with FTX on Coinbase

What’s new? Raoul Pal, a former executive of the investment bank Goldman Sachs and Real Vision TV CEO, believes that the deal between crypto exchanges Binance and FTX will have a positive impact on the US trading platform Coinbase. The macroeconomist noted that the latter is the only major exchange that reports, has an ownership structure, and is fully regulated. According to Pal, the strategic agreement between Binance and FTX will not please the US regulators. The expert wrote this on his Twitter.

I imagine that this will be good for Coinbase in the end. It's the only of the major exchanges that produces accounts, has an ownership structure and is fully regulated. Im sure US regulators will not like this potential FTX/Binance deal. But who knows! — Raoul Pal (@RaoulGMI) November 8, 2022

More details about the deal. On November 8, Binance CEO Changpeng Zhao announced that his company intends to buy FTX. The agreement was made due to the latter’s liquidity problems and the collapse of the native token FTT. Specific terms of the deal have not yet been announced and may be subject to change given the current situation, as it was concluded in an emergency at the initiative of FTX.

What kind of reaction to expect from regulators? Analysts at Bernstein investment company also believe that the crypto exchanges agreement could attract the attention of regulators, particularly antitrust regulators. According to the firm’s report, if the deal goes through, Binance will take more than 80% share of the global market of digital assets, CoinDesk reports.

Bernstein noted that FTX and Binance, which do business outside the United States, are both offshore companies. However, if FTX has investments in the US or Europe, it could give grounds for intervention by local regulators. In this, FTX CEO Sam Bankman-Fried noted that the purchase deal does not affect the US arms of both parties — Binance.US and FTX US — the latter, he said, continues to operate as usual and has no problems with liquidity.

According to representatives of Bernstein, Binance will take time to conduct a comprehensive audit of FTX, which will identify the amount of financial obligations to users and possible offenses regarding the use of client assets by third parties.

If FTX appears to have a deficit balance, Binance may buy it at a very low price which could lead to a claim from FTX’s investors, Bernstein noted. At the same time, the likelihood of a deal failure would have a negative impact on the entire market, analysts summed up.

Suspicions of FTX’s lack of liquidity surfaced following media reports that FTT tokens make up the majority of the capital of Alameda Research, which is owned by Bankman-Fried. Shortly thereafter, Binance began a complete liquidation of its positions in FTT. Consequently, the rate of the exchange’s token began to plummet and FTX customers withdrew over $6 billion from the platform between November 6 and 8. In the past 24 hours, FTT has plummeted by 73,79% to $4,48, and users experienced problems trying to withdraw funds.

CoinMetrics’ analyst suggested that Alameda’s $4,19 billion bailout was the cause of FTX’s collapse. As a result of the collapse, the fortune of the head of both companies collapsed by 93,6%. Commenting on this situation, Binance CEO urged exchanges to publish proof-of-reserves reports and also recommended crypto companies not to use native tokens as collateral for loans.