In a landmark move for the crypto industry, Binance announced yesterday that it intends to fully acquire rival crypto exchange platform FTX.
Binance CEO, Changpeng Zhao, revealed the seismic developments via his Twitter and will conduct a full due diligence in the “coming days” to secure the takeover.
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
Zhao added: “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.”
According to Coinmarketcap, FTX is the second largest crypto exchange platform with the acquisition following several days of dispute online between Zhao and FTX Founder and CEO, Sam Bankman-Fried over the company’s financial position.
CoinDesk broke the news last week that FTX’s sister trading firm, Alameda Research, was solely dependent on the success of the crypto exchange’s native token, FTT.
Binance then made the decision earlier this week to liquidate all its holdings of FTT, which was believed to be worth an estimated $529m. Zhao claimed this move from Binance was to avoid another repeat of a Terra Luna collapse, which had a ripple effect on the rest of the crypto market.
The move from Binance pushed the price of FTT down and the situation worsened for FTX users and FTT holders when the crypto platform temporarily halted all withdrawals from the site.
After days of turbulence, Zhao made the shocking announcement of acquiring FTX, which Bankman-Fried confirmed via his Twitter.
1) Hey all: I have a few announcements to make.
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.).
— SBF (@SBF_FTX) November 8, 2022
“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 apologise for that,” added Bankman-Fried.
“But the important thing is that customers are protected. A huge thank you to CZ (Zhao), 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.”