Binance signals intent to acquire rival crypto exchange FTX
The world’s largest crypto exchange, Binance, has signed a non-binding letter of intent to acquire rival FTX to help protect users’ holdings amid a “liquidity crunch”, according to tweets by Binance CEO Changpeng Zhao.
Binance CEO Changpeng ‘CZ’ Zhao
FTX CEO Sam Bankman-Fried also announced the news on Twitter that a “strategic transaction” has been hashed out with Binance, pending due diligence.
On Tuesday, Changpeng Zhao, known as CZ, tweeted that FTX “asked for our help”.
“There is a significant liquidity crunch. To protect users, we signed a non-binding LOI [letter of intent], intending to fully acquire FTX.com and help cover the liquidity crunch,” he wrote.
The firm will be conducting a full due diligence process in the coming days, CZ adds.
“This is a highly dynamic situation, and we are assessing the situation in real time,” CZ writes. “Binance has the discretion to pull out from the deal at any time. We expect FTT (FTX Token) to be highly volatile in the coming days as things develop.”
News of the deal sent the value of FTT tumbling, plunging 80% and wiping more than $2 billion off the value of the cryptocurrency, CNBC reports.
FTX CEO Sam Bankman-Fried added: “The important thing is customers are protected”. Bankman-Fried, known as SBF, says the firm is working on clearing out its withdrawal backlog.
“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,” SBF writes.
Attempting to dispel media rumours that the firms have been at odds in recent months, SBF says Binance “has shown time and again that they are committed to a more decentralised global economy while working to improve industry relations with regulators. We are in the best of hands.”
He also notes that as separate entities, Binance.US and FTX.US “are not currently impacted by this”.
Binance was the first investor to back FTX. The financial terms of the mooted deal have not been disclosed.
