Binance Buys Crypto Exchange FTX Amid Cash Crisis
Changpeng Zhao, founder and CEO of Binance, said the exchange had signed a letter of intent to acquire non-US FTX assets, after the latter “asked for help” amid a liquidity crunch. The deal between top contenders Sam Bankman-Fried, FTX’s CEO, and Binance’s CZ came as speculation about FTX’s financial health reached $6 billion (roughly Rs. 48,921 crore) of withdrawals within hours. -72 before Tuesday night. The release of one of the largest and most prominent companies in the global cryptocurrency industry by its biggest competitor has resurfaced across the market.
The deal with Binance ends the explosive and public row between Bankman-Fried and Zhao and will unite the world’s two largest crypto exchanges.
This afternoon, FTX asked for our help. There is a significant decrease in liquidity. In order to protect users, we have signed a non-binding LOI, aiming to fully benefit https://t.co/BGtFlCmLXB and help close the liquidity crunch. We will be doing a full DD in the coming days.
– CZ 🔶 Binance (@cz_binance) October 8, 2022
FTX’s troubles accelerated over the weekend when Binance said it intended to issue the FTX token, FTT, citing concerns about the stability of exchange fees and sending the token lower in price.
Bankman-Fried responded Monday, saying “a competitor is trying to go after us with false rumors.” He added that he would “love it” if he could work with Zhao together in the ecosystem.” The FTX executive also tried to calm the markets by saying: “FTX is doing well. The goods are fine.
But on Tuesday, he tweeted, “CZ has done, and will continue to do, an amazing job of building a global crypto ecosystem, and creating a free economic world.” Bankman-Fried also vowed that all client assets “will be covered one by one.” FTX confirmed the deal; The two companies did not immediately disclose terms.
In a letter to investors late Tuesday (via Reuters), Bankman-Fried tried to reassure FTX investors, saying “protecting shareholders is our top priority,” but said the details of the deal are “still being rushed.” Once completed, the deal will consolidate Binance’s position as the largest platform in crypto trading.
The crypto industry has struggled over the past year, especially since the failure of Terra and Luna tokens in May. The price of the flagship tokens bitcoin and ether fell, and several large companies fell, including the lender Celsius Network and the hedge fund Three Arrows Capital.
The bailout deal is also a major setback for Bankman-Fried, who has long been considered a stable and ambitious figure in the often volatile world of crypto.
After this year’s crypto market crash, he gained a reputation as the savior of the industry after helping failing companies. In June, the FTX chief announced a $250 million (roughly Rs. 2,038 crore) loan from ailing crypto lender BlockFi. The loan followed another bailout by crypto broker Voyager Digital, which was bailed out by a FTX loan worth around $485 million (roughly Rs. 3,953 crore) in cash and Bitcoin.
