Hello folks. It is Election Day in the U.S., and that was going to be my main focus today, up until about 11:05 a.m. ET anyway. That’s the point when Sam Bankman-Fried announced that his company FTX would enter a “transaction” with Binance, which Binance CEO Changpeng Zhao later clarified was a letter of intent for Binance to acquire FTX.

You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions.

The fall of an empire

The narrative

WELL, today has been a day. I had a whole election thing planned, but we’re not going to know what’s happening for a while anyway – so instead, I’m going to refer you to the links below to catch up on today’s news. CoinDesk will have a live-blog kicking off at about 8:00 p.m. ET to monitor for major moves and results.

Why it matters

FTX was a huge player. According to CoinGecko, as of this morning FTX was the fourth-largest exchange by volume. Sam Bankman-Fried was a huge donor during the midterm elections and was a leading voice on some legislation. He might still be, but his company going from being “fine” to signing a letter of intent with Binance over the course of two days might have some long-term ramifications. We’ll have more on this in the coming days, but for now catch up on the last … week? the last week of this chaos here.

Breaking it down

This whole thing started last week when my colleague Ian Allison reported that Alameda Research, a trading firm founded by Bankman-Fried and tied to FTX, held a remarkable number of FTT tokens on its balance sheet. FTT is the token issued by FTX.

Here’s what happened next:

• Binance to Sell Rest of FTX Token Holdings as Alameda CEO Defends Firm's Financial Condition
• FTT-Alameda Drama Weighs on Market as Asia Begins Its Week
• Open Interest in FTT Futures Doubles as Binance Moves to Liquidate FTX Token Holdings
• Solana Falls and Speculation Centers on Links to Sam Bankman-Fried’s FTX, Alameda
• FTX/Alameda Questions Hold the Spotlight as US Midterm Election, Inflation Data Loom
• FTX Token Plummets on Withdrawal Concerns, as Contagion Hits Broader Crypto Markets
• Bitcoin, Ether Slide as Protective Puts Draw Demand Amid Sell-Off in FTX's Token
• Abracadabra's MIM Stablecoin Briefly Lost Dollar Peg as FTX's FTT Token Tanked
• FTX's Bitcoin Balance Plunges to Just One
• FTX Agrees to Sell Itself to Rival Binance Amid Liquidity Scare at Crypto Exchange
• Bitcoin, Crypto-Linked Equities Resume Falling Despite Binance/FTX Deal
• FTX, Binance Deal Draws Antitrust Concern
• The Story of Sam Bankman-Fried’s Backroom Deal With Binance’s CZ
• Alameda Thanked for ‘Prompt Response’ in Transferring $37M of BitDAO Tokens
• FTX Token Falls 80% Despite Binance Bailout as Alameda Contagion Spreads to Bitcoin
• Crypto Markets Take a Wild Ride Following Surprise Binance/FTX Deal
• FTX Exchange Halts All Crypto Withdrawals

We’re going to need some time to figure out the implications. Bankman-Fried personally was a major donor this past election cycle (and sprung to prominence on the back of major donations in the 2020 election). A political action committee backed by Bankman-Fried is even rumored to be the next main super PAC to receive President Joe Biden’s blessing in the next election cycle.

There's also regulatory implications. FTX US Derivatives (formerly LedgerX) has a number of CFTC licenses, and FTX famously applied to try and settle derivatives directly, which the CFTC has yet to rule on.

Biden’s rule

Changing of the guard

N/A

Outside CoinDesk:

• N/A

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde.

You can also join the group conversation on Telegram.

See ya’ll next week!