World’s largest crypto exchange Binance to acquire rival FTX unit

Zhao tweeted saying “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
http://FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.”

The Binance CEO also said that the company has the discretion to pull out from the deal at any time.

He tweeted saying, “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.”

FTX chief executive officer Sam Bankman-Fried also took to Twitter to acknowledge the buyout.

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“Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.),” Bankman-Fried, or SBF as he is known in crypto space, said.

Apologising for the situation at FTX, Bankman-Fried said, “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,” but added that the interests of the customers will be protected.

The cryptoverse has been buzzing with chatter around the financial health of FTX amid liquidity concerns which had a larger impact on the crypto market as well.

Allaying the fears of his crypto investors, the FTX CEO said that FTX.us and Binance.us – two separate companies – are not currently impacted by this. Further, FTX.us’s withdrawals are and have been live, is fully backed 1:1, and operating normally.

Trading barbs

Earlier in the day, both Zhao and Bankman-Fried sparred on Twitter after Zhao announced plans to sell Binance’s roughly $530 million holding of FTT, the native token of FTX. Binance is the world’s largest crypto exchange.

Zhao said his decision was triggered by “recent revelations” after a November 2 article by news site CoinDesk said much of the balance sheet of Bankman-Fried’s trading house Alameda Research is comprised of the FTT token. He also added that due to market conditions and limited liquidity, this liquidation will take a few months to complete.

Bankman-Fried had responded to the rumours by saying a competitor was trying to go after them with false rumours and that FTX was fine, and so were its assets.

However, after the announcement of Binance’s prospective buyout of FTX, the latter’s CEO tried to clarify and agreed “there were rumours in the media about a conflict between the two”.

“I know that there have been rumors in 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 said.

Since Zhao’s announcement, FTT has fallen for three consecutive sessions and on Tuesday, it fell to its lowest level in 21-months as traders rushed to withdraw funds and liquidate their positions.