Binance, the world’s biggest cryptocurrency firm, has agreed a deal to buy rival crypto exchange FTX. The potential acquisition could help FTX stay afloat in the face of what Binance’s CEO called a “significant liquidity crunch” for the platform.
The deal was revealed this afternoon on Twitter by Changpeng Zhao, Binance CEO, who said the two companies had signed a non-binding “letter of understanding”.
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
“There is a lot to cover and [it] will take some time,” Zhao said. “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.”
FTT is FTX’s native token, and its value had fallen sharply on Monday over concerns about the liquidity of the platform and that of a sister company, Alameda Research.
Binance FTX deal could bring together rival cryptocurrency exchanges
FTX was founded by cryptocurrency pioneer Sam Bankman-Fried in 2019 and has over a million users. The value of its token climbed sharply on the news of the possible takeover. Bankman-Fried confirmed the deal could go ahead, tweeting “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.”
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, 2022Content from our partners
The deal, the value of which is undisclosed, would cover FTX’s operations in all parts of the world apart from the US. Binance for its part has 21.5 million registered users and the exchange supports over 500 cryptocurrencies, making it the world’s biggest crypto-exchange. Its work in the UK has proved controversial, with financial markets regulator the Financial Conduct Authority having banned it from conducting regulated activities last June over fears the platform could be used for money laundering.
Cryptocurrency businesses have been under pressure this year following the crypto-crash, which impacted the value of several major currencies and saw one so-called stablecoin, Terra USD, collapse.
