FTX vs. Binance – LBRY Loses the SEC

Market situation

The stock market yesterday was quite upbeat before the midterm elections. Stocks rose in all three indexes. Stock futures are also slightly bullish. Oil price increased to 91 USD/barrel. And gold fell slightly to 1676 USD/ounce.

Bitcoin price dropped to around $19,700. ETH and most altcoins also fell.

Meta Company began to lay off a series of employees, which caused the company’s stock to rise slightly. This is the first large staff reduction in Meta’s history, the layoffs could affect thousands of employees, according to the Journal. The company said it had 87,000 employees as of the end of September.

Recently, he said Twitter has experienced a “huge” revenue drop when some advertisers halted spending (such as General Motors, Lamborghini, Porsche, Pfizer,…) . So, Elon Musk began mass layoffs of Twitter employees starting last Friday. This is how Elon cuts costs and is looking for ways to generate new revenue for the platform.

The job market has also shown signs of cooling down. Information about companies laying off employees has also increased in the fourth quarter.

Update on the drama CZ and Sam Bankman-Fries

More and more conspiracy theories surrounding CZ and Sam continue to be made. One Twitter account @cryptomanran said: “CZ is so smart! Sold my FTX stake more than 1 year ago, but still holding the FTT received… waiting for the opportunity when Alameda has over-leveraged based on the FTT token price. One fine day, CZ announced to publicly sell out FTT tokens to deal maximum damage.”

CZ also replied in denial under the above tweet. He said that the sharing is intended to publicize the community about Binance’s actions and has no other purpose. He only focuses on building and developing the crypto market and dismisses rumors that CZ and Sam are at odds with each other.

However, CZ also had another tweet that caused even more speculation. He said that Binacne’s sale of all FTT tokens is just risk management and learning from LUNA. CZ and Binance are not against anyone but also will not support those lobbying against other companies in the crypto market behind their backs. This tweet led many to think that CZ was referring to FTX and Sam Bankman-Fries.

Because so far, Sam has many times donated huge amounts of money to politicians in campaigns like President Biden’s. Or most recently, Sam donated up to $50 million to Democrats in this week’s election. The tweets also say that Sam is someone who seems to be very political.

Next, Sam’s concern about FTX and Alameda Research is at issue. Some people have pointed out that just within the past August and September, suddenly the president of FTX (Mr. Brett Harrison) and CEO of Alameda (Mr. Sam Trabucco) have resigned. The question is whether this is a bad sign for these two companies.

Regarding politics, in a tweet thanked CZ for his contribution to crypto and made an appointment to meet in DC. Then Sam replied to that tweet, welcoming CZ but saying if CZ was allowed to come to DC. This link to Sam’s political connections built by supporting parties and politicians reinforces theories that he is the person CZ alludes to.

Recently, there have been some rumors that Binance exchange is being investigated because they let people in the embargoed country, Iran, trade on their platform. Combining the above information, many people believe that the reason why Binance was suddenly investigated is because Sam is the person behind the impact.

Earlier, FTX’s Carola responded when CZ said that it would sell all FTT tokens that FTX would be willing to buy back all of Binance’s FTT for $22. But yesterday, Sam said that Carola’s words were not his request but also added that FTX is ready to buy back FTT if Binance wants to sell all its tokens within a few months. CZ was asked if FTX would buy back then Binance would sell FTT for $22 and he said he wanted to sell on the free market and mentioned LUNA.

FTX is having obvious losses surrounding the drama. Over the past few days, huge amounts of BTC, ETH and stablecoins have left the FTX sanctioned by investors’ concerns. Many withdrawals take longer, but Sam insists they don’t lose liquidity, it’s just because there are so many withdrawals that they need more time to process. The impact of the recent LUNA incident as well as the recent bankruptcy of crypto companies made many people fear that history would repeat itself, so they poured money out of FTX.

Wu Blockchain has cash flows drawn from many exchanges such as Binance, Houbi, Gate.io, OKex and some wallet addresses going into Alameda Research wallets. After that, money from Alameda Research’s wallet was put on the FTX exchange. Some assumptions are made that this money was raised to provide liquidity for FTX. However, there is no evidence that FTX is losing liquidity. In fact, the money that is leaving FTX these days is very large.

Sam is trying very hard to solve the trouble and damage that FTX and Alameda Research are facing. He also actively called on CZ to sit down to solve current problems.

Thuan holds a very small number of FTT tokens. Facing this situation, Thuan decided to convert all existing FTT to ETH. Because Thuan prioritizes safety for his long-term investment strategy.

New update, CZ announced on Twitter that FTX asked Binance for help when FTX’s liquidity dropped significantly. CZ said that, to protect users, Binance signed a non-binding agreement, intending to buy back all of FTX and help solve the liquidity problem. They will need time to reassess FTX’s finances. Along with that, CZ said that Binance reserves the right to withdraw from the signed agreement at any time because FTT is very volatile.

LBRY loses lawsuit against SEC

LBRY is a blockchain-based file sharing and payment processing network that works specifically with decentralized social media and content sharing platforms. This is a business model that is said to hold a lot of promise, LBRY calling itself an alternative to sites like Twitter, putting decentralization above all to prevent similar fates.

The SEC also sued LBRY, alleging that it issued securities as unregistered LBRY tokens in 2021. The court recently ruled in favor of the SEC that LBRY is a security. The judge gave three reasons for his decision.

First, the way this company’s leader promoted the LBRY token was concluded by the judge to be similar to a security. The company LBRY attracts users to own their token by as their platform grows, so does the token. At the same time, the company will focus on developing the token’s network. The growth of the LBRY network is tied to the growth of the company. Prominent examples are given when the LBRY token dropped in price, the company’s management stood up to share the vision and development of their company and the token network.

Next, the judge said, LBRY’s conduct satisfies the Howay Test law that defines securities. After the token sale, the company will use that money back to develop the company. As can be seen, the LBRY token is completely based on the efficient operation of the company and it grows as the company grows.

Finally, whether there are some buyers to use the network. But as long as there are a few buyers thinking it will increase in price in the future, this price increase comes from the company’s development. That was the third reason the judge concluded.

Although there are some who object that the definitions and reasons given are general and unconvincing. But in the end, LBRY was concluded to issue unregistered securities. This company will have to pay fines and may need to compensate those who own tokens according to regulations. At the same time, they will also have to register this token as a security with the SEC.

After this lawsuit, many information flows fear that the SEC will strain and overwhelm Ripple in their case. However, the two companies have very different conditions and factors, so LBRY’s case is unlikely to affect Ripple’s lawsuit with the SEC. Ripple is also the stronger company financially to fight the SEC. We continue to wait for the next information of this case.