FirstFT: FTX on brink of collapse

The digital assets industry has been shaken by the near-collapse of Sam Bankman-Fried’s FTX, one of the largest crypto exchanges, which clinched a rescue deal with arch-rival Binance after a surge in customer withdrawals sparked a liquidity crisis.

Binance chief executive Changpeng “CZ” Zhao wrote on Twitter that FTX had “asked for our help”, adding: “There is a significant liquidity crunch.” Binance has signed a letter of intent to buy FTX, but said it had “the discretion to pull out from the deal at any time”.

The bailout of one of the biggest and most prominent companies in the global cryptocurrency industry by its chief competitor reverberated across the market. Bitcoin, the most actively traded token, fell as much as 17 per cent while smaller coins faced steeper falls. US-listed crypto exchange Coinbase dropped about 14 per cent.

In an industry that has been called the “wild west” by Wall Street’s top regulator, FTX was widely considered to be one of the better-managed players, with its founder Bankman-Fried regularly lobbying lawmakers in Washington.

The deal with Binance ends an explosive and very public row between Bankman-Fried and Zhao and will combine two of the world’s biggest crypto exchanges.

FTX’s troubles accelerated over the weekend when Binance said it intended to offload its holdings of FTX’s token FTT, citing concerns over the exchange’s financial stability and sending the token plunging in price.

For more on the latest ructions in the crypto world, premium subscribers can sign up for our Cryptofinance newsletter here. Thanks for reading FirstFT Asia. — Emily

Five more stories in the news

1. Trump predicts ‘great night’ for Republicans Donald Trump predicted a “great night” for Republicans, as Joe Biden warned Democrats are facing a “tough” battle in closely watched US midterm elections set to reshape Washington and fire the starting gun on the 2024 presidential election cycle. Follow along with the latest on our live blog.

2. TikTok overhauls US business TikTok’s US operations are undergoing a big restructuring as the social platform responds to a slowing economy and a depressed environment for digital advertising. The reorganisation has resulted in sweeping leadership changes to the US business, the largest market for TikTok, owned by China-based parent company ByteDance.

3. Russia becomes India’s top oil supplier Russia has surpassed Iraq and Saudi Arabia as India’s largest supplier of oil, according to independent research companies, as Asia’s third-largest economy cashes in on steep price discounts caused by sanctions against Moscow.

4. Germany set to block Chinese chip deal The German government is expected to formally bar the sale of Dortmund-based Elmos’s semiconductor plant to China-owned Silex Microsystems following a cabinet meeting later today. The blocking of the sale comes just days after Olaf Scholz made his first visit as chancellor to Beijing.

5. Khan supporters step up protests in Pakistan Supporters of Imran Khan have blockaded motorways around Pakistan’s capital as they step up their efforts to topple the government following an assassination attempt on the former prime minister. Hundreds of supporters of Khan’s Pakistan Tehreek-e-Insaf (PTI) party blocked traffic on one of the main arteries into Islamabad and temporarily cut off access to the airport.

The day ahead

China inflation data October consumer price index and producer price index inflation rate data are set to be released today. See how your country compares on prices with our global inflation tracker.

Finance ministers convene at COP27 Global leaders will meet to reflect their commitment to climate action at the UN climate summit in Sharm el-Sheikh. US climate envoy John Kerry is also expected to announce his proposal for a power-sector credits system today.

EU budget rules overhaul Under the blueprint to be set out today, member states would be able to agree more realistic debt-reduction paths with the commission, while creating extra space for public investment.

Earnings Adidas, Bank of Ireland, Commerzbank, Honda, ITV, Kirin Holdings, National Australia Bank, Nissan Motor Corp and Tata Motors will report results Wednesday.

Join leaders including Singapore’s Minister of Trade and Industry, the Deputy Chairperson, CEO & Executive Director of Mewah International Inc. and more on November 23 in Singapore at The Westin and online to speak about the future of the commodities industry. Register here for your in person or digital pass today.

What else we’re reading

Delay only makes climate action more urgent We have a global challenge that can only be solved with huge investments, notably in new energy systems. But our capital markets are fragmented by country risk, writes Martin Wolf. The only solution is for rich countries to underwrite a substantial part of that risk.

What US Republicans may do with a House majority If the polls are correct, Republicans are on course to take back control of at least one chamber of the US Congress. Kevin McCarthy, who is widely expected to become the next Speaker of the House if Republicans win the lower chamber, has hinted in recent weeks about what might be in store.

Apple’s bargain with Beijing Apple’s record profits in greater China are
the result of corporate diplomacy led by chief executive Tim Cook — allowing the Silicon Valley company to sail through President Xi Jinping’s crackdown. But critics argue Apple’s reliance on Chinese manufacturing has made it acquiesce too readily to authoritarian demands.

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PoWs recall desperate fight for Mariupol In September, 215 prisoners in Russian captivity were released in the largest exchange since Vladimir Putin launched his full-blown invasion of Ukraine. Now they have shared their insights into a critical early battle of the war with the Financial Times. “It felt like one long day in hell”, said Major Oleksandr Voronenko.

Hong Kong takes on Singapore for Asia’s crypto crown Hong Kong trails Singapore in terms of the value of crypto assets received but a sudden shift by regulators last week towards clearer rules to allow retail investors to trade digital assets after years of ambiguity has led executives to warn that Singapore may be squandering its lead.

Fashion

Like Arsenal’s standing in the Premier League or Matt Hancock’s career in television, the Mary Jane shoe is rebounding in the fashion world, surprising everyone who’d written off dainty footwear for chunky boots and orthopaedic-looking trainers. Sign up for our new Fashion Matters newsletter launching later this month.