Did Binance just do what we think it did? The world’s biggest cryptocurrency exchange by trading volume will likely buy one of its biggest competitors. The market was in turmoil, the players were in panic mode, but this news calmed the waters in a big way. What’s next, though? Will Binance actually go through with the buyout? Is the deal final? And what does this story says about FTX’s business model? Were they fractional-reserving their way to success? Let that sink in… pic.twitter.com/Whj50bR2Ey — wolf (@ImNotTheWolf) November 8, 2022 Let’s analyze the official but not abundant information out there and try to reach our own conclusions. Related Reading: Users Flee FTX? Exchange Sees 47% Drop In On-Chain Balance Sam Bankman-Fried Bends The Knee After a whole morning of radio silence, the mind behind FTX and Alameda Research finally spoke. In a Twitter thread that will live for the ages, Sam Bankman-Fried was as vague as one can be. “we have come to an agreement on a strategic transaction with Binance for FTX.com,” he tweeted. Then, he announced that “our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1.” Wasn’t that supposed to be the case from the beginning, though?  2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that. — SBF (@SBF_FTX) November 8, 2022 Then, Bankman-Fried proceeded to effectively declare a winner. “A *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry,” he tweeted about his new boss. “Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.” 5) I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands. — SBF (@SBF_FTX) November 8, 2022 Is the deal set in stone, though? According to River’s CEO Alexander Leishman, “The DD on this deal is going to take forever. Bankruptcy still on the table if Binance decides they don’t want to touch it after digging deeper.” BNB price chart on FTX | Source: BNB/USD on TradingView.com The Binance CEO Announces Its Win Allegedly, CZ knew what he was doing the whole time. After distancing himself from the concept of war and saying Binance was focused on building, today CZ can really show his true colors. “This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,” he humbly tweeted.  There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop. — CZ 🔶 Binance (@cz_binance) November 8, 2022 However, CZ is admitting to a liquidity crunch that shouldn’t be there. And then, he clarifies that the deal isn’t done yet. “There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.” Related Reading: The Binance Vs. FTX War: Here Are The Most Recent Stats & On-Chain Data Analyzing the little data we have, DeFinace Capital’s Arthur Ox tweeted, “Given how little time it took to close this deal. It’s likely Binance acquire FTX for nominal/negligible amount and assume all the liabilities of FTX.” And then, he gave advice, “if I am previous round investor of FTX, I will probably start engaging litigation lawyer now.” The Future For Binance And FTX The analysts are having a field day with this story.  Dylan LeClair, who’s been covering the ins and outs from day one, recently tweeted that the resolution “confirms that FTX is insolvent without a bailout from Binance” and that “Alameda was speculating with user funds.” Those are hard accusations, but he’s got some data to back them up.  "Liquidity crunch" I thought your deposits were backed 1:1?? Or was your "proprietary trading desk" directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted. pic.twitter.com/f7Y3LsYsqq — Dylan LeClair 🟠 (@DylanLeClair_) November 8, 2022 Questioning the liquidity crunch, LeClair asks, “was your “proprietary trading desk” directionally trading using user funds. We could all see the movements flooding back from Alameda wallets on-chain yesterday as reserves got depleted.” Taking it to the next level, economist Tuur Demeester is concerned with the implications, “If Binance buys FTX and hence takes over the claims of its depositors, it seems likely that Binance then would also become (or remain) a fractional reserve operation.” Featured Image by Candice Seplow on Unsplash | Charts by TradingView