It took less than a week for Sam Bankman-Fried to turn from crypto wizard to blockchain pariah.The 30-year old billionaire-turned-millionaire recently one-upped the Terra (LUNA-USD) network’s collapse with the demolition of his FTX exchange — one of the top five largest crypto exchanges in the world.Now, as Binance ( BNB-USD ) backs out of its plans to bail Bankman-Fried out, FTX is at the mercy of a new potential savior: Tron ( TRX-USD ) founder Justin Sun.But will Sun’s investor-funded bailout strategy really work?
Earlier this month, a report put Alameda Research, FTX’s sister company, on the ropes.As it turns out, over one-third of the company’s holdings were made up of FTX Token (FTT-USD).The news suggested that Alameda’s balance sheet was not as strong as investors previously thought .It also brought a lot of worry for FTX, suggesting that the FTT market is almost entirely illiquid.
In an effort to both protect Binance ( BNB-USD ) and put pressure on the FTX network, Binance CEO Changpeng Zhao began selling off the company’s millions of FTT tokens, cratering the crypto’s value.
This has caused a rush of investors from the platform, triggering a liquidity crisis and leading to a full-on trading halt as FTX fell apart from the inside.
Binance extended an offer to acquire FTX in the wake of the company’s death knell.However, it ultimately backed out of the sale , sensing a lot of turmoil for the company during its due diligence check.And now the FTX empire continues its crumbling .
The company has filed for bankruptcy and Bankman-Fried has stepped down as CEO.With Binance pulling out of the deal, FTX’s future is extremely bleak.But the company may have found a new helping hand through the Tron network.
Justin Sun and Tron Roll Out FTX Rescue Plan
Binance is taking back the hand it extended to FTX.But Justin Sun is swooping in to try and save the company and its global network of users himself.The founder and CEO of the layer-1 dapp network Tron, Sun is using his platform to try and bail out FTX.However, how Sun is choosing to do so is raising eyebrows.
Will the gamble pay off?
On Wednesday, just as the Binance acquisition talks fell through, Sun took to Twitter to declare himself the FTX savior.Without providing much in the way of details, Sun said that Tron was “putting together a solution” for the beleaguered exchange.
Yesterday, the company launched its first step in saving FTX.The plan allows holders of various Tron tokens, including TRX, BitTorrent (BTT-USD) and others, to withdraw their funds from FTX.Essentially, those who wish to withdraw their funds from FTX can do so by buying Tron cryptocurrencies from FTX at a significant mark-up from what other exchanges offer.
If this plan catches on, it will let FTX close up the “$9.4 billion hole in its balance sheet.”
However, this move is already proving controversial.The announcement from Tron and FTX came with little clarification or detail.It currently only applies to Bahamian residents, a detail left out of the original announcement.And, Tron tokens were already trading at increased values prior to the announcement.This is leading to theories that insiders were given a first crack at FTX withdrawals.
Still, Justin Sun is reiterating his plan to help FTX further.
Pending a due diligence check by Tron, Sun says he is ready to supply “billions in aid” to help save the exchange.
Brenden Rearick .