Binance to Acquire FTX.com After Liquidity Crisis
The announcement comes hours after Binance CEO revealed plans to sell the company’s holdings in the FTT token.
Leading crypto exchange Binance announced a non-binding agreement to buy the non-U.S. unit of its major rival, FTX.com.
The announcement came directly from Binance CEO Changpeng Zhao on Tuesday. “This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,” said Zhao in a tweet, warning that “Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.”
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.— CZ 🔶 Binance (@cz_binance) November 8, 2022
On the other side, FTX CEO Sam Bankman-Fried responded saying that the deal will help FTX clear out liquidity crunches along with protecting the customers. “This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world. I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands,” he added, clearing that all assets will be covered 1:1.
1) Hey all: I have a few announcements to make.— SBF (@SBF_FTX) November 8, 2022
Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).
The agreement come hours after Zhao tweeted on Sunday that Binance decided to liquidate its holdings of FTX’s digital token, bringing FTT to lost almost 75% of its value this week to less than $12 and triggered $6bn (£5.2bn) of withdrawals. Binance already invested in FTX in late 2019 before exiting the investment in July last year.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4— CZ 🔶 Binance (@cz_binance) November 6, 2022
Binance is already the world’s largest exchange by trading volume, followed by Coinbase clocking around 20% of its volumes and FTX as the third-largest exchange and one of its up-and-coming competitors.