👉Background: FTX is one of the fastest growing crypto exchange that only started 3 years ago. It was the third-largest exchange by trading volume and has celeb investors like Tom Brady.

👉 What happened: A crazy chain of events between Binance, the largest crypto exchange and FTX has ensued over the last 72 hours. Firstly, some context:

• 2019: Binance took a strategic investment in FTX.
• 2020-2022: Binance and FTX become major competitors as two of the leading crypto exchanges.
• November 2022: Binance founder and FTX founder began throwing barbs at each other on Twitter over crypto regulation and stability of platforms.
• November 6: Binance sought to sell nearly $2 billion USD worth of FTT (the token that underpins FTX).
• Nov 9, 2022: FTX customers tried to sell $6 billion from FTX's exchange in the space of just 72 hours after panic set in.
• Nov 9, 2022: Binance announced it would take over FTX for an undisclosed amount because of a 'liquidity crunch'.

👉 What else: Now, Binance's CEO has backed out of the deal to buy FTX because the issues with FTX are "beyond our control or ability to help". Yikes!

What's the key learning?

💡 Liquidity is a term used in the financial world to refer to how easily an asset can be sold and converted into cash.

💡In the crypto world, liquidity is the ease in which a token, like FTT or Solana’s SOL, can be exchanged for other tokens or converted into cold, hard cash.

💡In an ideal, lusciously-liquid world, crypto platforms hold a 1:1 equivalent cash value in proportion to assets sold. But clearly, this wasn’t the case at FTX, when the Binance founder caused a liquidity crunch.

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