Because they wanted to create a liquidity crisis in FTX that would force FTX to sell itself for a discount?

Presumably, it is more appealing to Binance to kill their largest competitor than it is to realize a return on a minority investment.

It depends on the fixed price offered by FTX.

If FTX could pay the current market price, then they could have absorbed whatever Binance sold on the open market.

They probably offered a deep discount.

Or maybe they offered to buy it later (when?) at a price fixed today - discounted or not. If they don’t have liquidity (why?) they cannot buy it on the market.

Illiquid means you can't sell your position without lowering the price significantly.

It could be that you need time to sell, or it could be that no one is stupid enough to buy it.

The former can be fixed with a temporary loan, the latter in bankruptcy court.

As discussed extensively elsewhere an “exchange” shouldn’t be in the business of having illiquid positions in the first place.

But here we are, and I’m not sure if FTX was offering to buy with some favorable terms regarding the time of settlement in addition to a discount. They could have bought on the open market at the discounted price but they apparently didn’t…

> Why would Binance decline this opportunity?

Given what happened, it's unclear FTX ever had the funds with which to buy Binance's FTT.