Share this article
FTX, Binance Deal Draws Antitrust Concern
Regulators have tough powers to stop mergers that quash competition
Updated Nov 9, 2022, 5:48 p.m. Published Nov 8, 2022, 5:27 p.m.
Make us preferred on Google
The proposed sale of FTX’s non-U.S. business to Binance, announced Tuesday amid concerns over stability at FTX, has drawn concerns of antitrust retaliation in the U.S. and elsewhere.
Regulators across the world have the power to block major mergers if they fear they would limit market choice, and also have strict laws against anti-competitive behavior. Binance is the world’s largest crypto exchange by volume, while FTX is within the top five, according to data site CoinGecko.
STORY CONTINUES BELOW
Binance Chief Executive Changpeng “CZ” Zhao and FTX boss Sam Bankman-Fried tweeted news of the plans on Tuesday, drawing immediate questions over compliance with antitrust laws.
“Next time, check the compliance of your tweet with antitrust laws before you post,” tweeted Thibault Schrepel, an associate professor at Amsterdam University who specializes in blockchain and antitrust issues, of CZ’s announcement. “At this stage, I wouldn’t be surprised to find this tweet in a forthcoming court document/antitrust litigation.”
US regulators could step in
In the U.S., antitrust laws such as the Sherman Act outlaw direct competitors from acting to protect each other. CZ said that he had stepped in to protect users after FTX, faced with a “significant liquidity crunch” had asked for help. That suggests an illegal agreement, Schrepel says – who believes that U.S. laws would apply since the deal affects the entire company, regardless of whether FTX US is part of the deal or not.
Brandon Kressin, a crypto-focused attorney at boutique antitrust law firm Kressin Law Group, seconded Schrepel's concerns.
"This [deal is] a textbook horizontal merger of the sort that the antitrust laws in the U.S. and internationally are meant to address," Kressin said. "I think that the apparent hope they have that excluding the U.S. exchanges from the deal is going to save their deal from antitrust scrutiny is very short sighted. These are global markets, and the transaction is undoubtedly going to have an effect on the U.S. – and U.S. enforcers have an interest in making sure that the antitrust laws protect U.S. consumers."
Mergers and Acquisitions 101
While the Twitter announcements from Binance and FTX on Tuesday made the deal look all but done, Kressin said it's likely just the start of a months-long legal process that could potentially result in federal regulators attempting to block the acquisition.
"They're likely going to have to file [premerger notifications] with the merger enforcement authorities in a lot of different jurisdictions," Kressin said. "In the U.S., that's with the Department of Justice and the [Federal Trade Commission]. I think it's likely that this would go to the DOJ, and the DOJ would be looking at the deal and deciding whether they want to sue under the U.S. antitrust laws to block a transaction."
Kressin added that Binance's Chinese origins (though the exchange has long pushed back against being labeled as a "Chinese company") could result in an extra layer of scrutiny for the deal.
"There is a concern that runs along with general antitrust concerns about this being a direct, horizontal overlap with the dominant player in teh world market," Kressin said. "The fact that there's at least a possibility or suggestion of Chinese involvement is going to raise the scrutiny."
Kressin also said the swift pace of the potential deal and the method in which shareholders were informed could lead regulators to double down on their inspection of the deal.
"Announcing the deal on Twitter like this with so little notice to other important stakeholders, suggests [Binance and FTX] might be aggressive and potentially reckless here," Kressin said.
"You have to give the antitrust authorities a chance to evaluate the transaction first. You can't just start taking actions that merge the companies and taking actions that you wouldn't otherwise take, if not for the fact that you're being merged," Kressin added. "Them taking actions already based on the assumption that this transaction is going to go through may itself raise what we call 'gun jumping' issues."
Read more: The Story of Sam Bankman-Fried’s Backroom Deal With Binance’s CZ
The European Union also has anti-trust teeth
Antitrust authorities in jurisdictions such as the European Union must also approve, and can block, mergers and acquisitions. Those between major market players vying for the same customers are likely to be of particular interest. For larger deals, the European Commission can fine companies up to 10 percent of turnover if they “jump the gun” by anticipating its approval.
CZ characterized the deal as a non-binding intention, that would be the subject of due diligence investigations in the coming days.
Spokespeople for FTX, Binance and the European Commission did not immediately respond to a request for comment.
Amitoj Singh contributed reporting.
UPDATE (Nov. 8, 2022, 23:40 UTC): Adds additional detail throughout.
More For You
Pudgy Penguins is building a multi-vertical consumer IP platform — combining phygital products, games, NFTs and PENGU to monetize culture at scale.
What to know:
Pudgy Penguins is emerging as one of the strongest NFT-native brands of this cycle, shifting from speculative “digital luxury goods” into a multi-vertical consumer IP platform. Its strategy is to acquire users through mainstream channels first; toys, retail partnerships and viral media, then onboard them into Web3 through games, NFTs and the PENGU token.
The ecosystem now spans phygital products (> $13M retail sales and >1M units sold), games and experiences (Pudgy Party surpassed 500k downloads in two weeks), and a widely distributed token (airdropped to 6M+ wallets). While the market is currently pricing Pudgy at a premium relative to traditional IP peers, sustained success depends on execution across retail expansion, gaming adoption and deeper token utility.
More For You
WH advisor Patrick Witt: Davos 2026 was ‘turning point’ for global crypto normalization
White House crypto advisor Patrick Witt said stablecoins are the “gateway drug” for global finance and that Washington is racing to deliver regulatory clarity.
What to know:
The Context: The Executive Director of the President’s Council for Advisors for Digital Assets sat down for an interview with CoinDesk where he said the recent World Economic Forum in Davos served as a stage for the Trump administration to signal its commitment to normalizing digital assets as a permanent asset class. He said:
- The administration aims to strike a balance between traditional financial incumbents and new crypto entrants through a "symbiosis" where they can coexist and compete.
- Consumers benefit from this competition, positioning the current administration as firmly on the side of technological innovation.
- The President renewed a pledge at the event to establish the United States as the undisputed "crypto capital of the world".
Latest Developments: Regulatory movement is accelerating in Washington with key committee markups scheduled for major digital asset legislation.
- The Senate Agriculture Committee is set to mark up its portion of the market structure bill on Thursday, January 29th at 10:30 AM.
- The Senate Banking Committee has postponed its markup, requiring further mediation on issues like stablecoin rewards and ethics.
- Witt expressed confidence that despite these delays, the legislation will eventually be reconciled and brought to the Senate floor.
Reading Between the Lines: Stablecoins are acting as a "gateway drug" for global business leaders who are beginning to grasp the technology's potential—and its threat.
- Witt observed a cycle where traditional players move from a lack of understanding to fear, and finally to incorporating crypto into their own product offerings.
- While some Senate Republicans worry about stablecoins causing deposit flight from community banks, Witt believes a "smooth glide path" into these future technologies is possible with patience and cooperation.
- “Consumers win when there’s choice,” he said, while also acknowledging concerns from Senate Republicans about community banks and financial stability. The administration, he suggested, sees convergence between crypto and traditional finance as inevitable but wants the transition to be smooth rather than destabilizing to all parties.
- U.S. regulators intend to lead the global regulatory conversation, even if the domestic legislative process results in imperfect "directionally accurate" rules.
What Comes Next: Once the primary market structure bill passes, the administration plans to pivot toward a major crypto tax package.
- Witt suggested there is still a window of opportunity to pass additional digital asset legislation this year before midterms dominate the congressional calendar.
- The administration is also monitoring "developing situations" regarding digital assets potentially seized in national security actions abroad, such as in Venezuela.
- Finally, Witt declined to specifically comment on speculation that Venezuelan enforcement actions may have involved seized digital assets, citing national security sensitivities and an evolving situation, but did add, “There’s a number of folks in the national security apparatus engaged,” in regards to how the Maduro regime was financed.
Top Stories
