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Coinbase FTX.US takeover: COIN CEO Armstrong says ‘that would not make sense’

By Darius McQuaid

Edited by Charlie Mellor

13:11, 9 November 2022

Coinbase logo displayed on a phone screen and representation of Bitcoin
Coinbase boss Brian Armstrong has said there are no plans to acquire FTX.US – Photo: Getty Images

Brian Armstrong, CEO of Coinbase, the largest cryptocurrency exchange in the US, has made it clear that his company will not be attempting to buy FTX.US – the North American affiliate of the cryptocurrency derivatives exchange FTX.

On 8 November 2022, Binance, the world’s largest cryptocurrency exchange by trading volume, announced it was buying FTX after reaching a bailout deal with the embattled crypto company.

Changpeng Zhao, founder and CEO of Binance, said that FTX had asked it for help due to “a significant liquidity crunch”.      

Zhao stated Binance will fully acquire FTX, but not FTX.US. Separately, Sam Bankman-Fried, CEO of FTX, stressed that FTX.US is a separate company and should not be impacted by this deal.    

However, Zhao did add that as part of the deal Binance had the “discretion to pull out from the deal at any time”.  

BTC to USD 

Coinbase does not engage in ‘risky behaviours’

Armstrong told Bloomberg that the liquidity crunch that led to the FTX bailout plan with Binance would never happen to Coinbase as it does not engage in “risky behaviours”.

Armstrong added: “We’re not investing customer funds. We’re not doing market making or engaged in any kind of complex arrangement with other parties that we own.”

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The Coinbase CEO said regarding the possibility of buying FTX.US “there’s reasons why that would not make sense”.

However, he said presently he is not “at liberty to share the details right now” and will let other people reveal the information “if and when they are ready”. He added that he felt all the information “will come out eventually”.

Armstrong did reveal that he has had a “number of conversations with people over the last 24 hours” about FTX.US following the Binance deal.

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Regulation

As Bankman-Fried played an active role in lobbying for regulation in the US, Armstrong said: “There’s probably a lot of people in [Washington] DC right now kind of scratching their head.”

Additionally, he hoped that this event does not “taint” regulators perception of the crypto industry.

‘A huge thank you to Zhao’

The FTX CEO said via Twitter that the “strategic transaction” would help “clear out liquidity crunches”, and he offered “a huge thank you to Zhao”. Bankman-Fried went to explain that all “assets will be covered 1:1” and that is one of the main reasons why help was sought from Binance.

Bankman-Fried also tried to calm down the crypto market and added “the important thing is that customers are protected”. He went on to say that it may take time to settle and he wished to “apologise for that”.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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