Binance CEO Changpeng Zhao said that his exchange has signed a non-binding letter of intent (LOI) to acquire FTX to “help cover liquidity crunches”, adding to the speculation that the troubled exchange has been insolvent for some time.
Binance has the discretion to exit the deal at any time.
Binance.us and FTX.us will continue to work independently.
FTT jumped on the news, but is still down 20% on the day.
The Binance-FTX saga has come to a surprising conclusion. In an unexpected turn of events, the world’s largest crypto exchange announced it’s going to acquire its troubled competitor that has been dealing with liquidity crunches amid rumors of insolvency.
Binance CEO Changpeng Zhao (CZ) announced on Twitter that his exchange has signed a non-binding letter of intent (LOI) to acquire FTX and “help cover the liquidity crunch.”
“There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. 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,” said CZ.
FTX CEO Sam Bankman-Fried said on Twitter that he asked Binance to come in to help clear out its withdrawals backlog, adding weight to the rumors that the exchange has been insolvent for some time.
“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. – we apologize for that,” he said.
Bankman-Fried added that Binance.us and FTX.us will continue to work independently. He thanked CZ and Binance for their help.
“A huge thank you to CZ, Binance, and all of our supporters. 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, SBF said.
“I know that there have been rumors in the 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.
FTT jumped on the news and is currently trading at $17.8, according to data from CoinGecko. It was down as much as 34% on Tuesday.
Binance’s move to acquire FTX comes after rumors started circulating that the exchange holds large amounts of its native token FTT and is effectively insolvent. In response, CZ tweeted that Binance is going to sell its FTT stake, triggering panic among token holders and exchange users.
Following the news, FTT plunged more than 40%. On top of that, CZ’s tweets caused a bank run on FTX. The exchange has seen hundreds of millions of dollars withdrawn, with some reporting they’re experiencing delays. FTX boss Bankman-Fried responded to this by saying “a competitor is trying to go after us with false rumors. FTX is fine. Assets are fine.”
On the Flipside
The details of the deal are not clear yet.
CZ said that Binance has the right to pull out from the deal anytime it wants.
Why You Should Care
FTX is one of the largest exchanges in the world. Binance acquiring FTX is perhaps the largest acquisition for a crypto company.
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