Binance CEO Changpeng “CZ” Zhao acknowledged the signing of a non-binding letter of intent on Twitter.
Binance agreed to acquire rival cryptocurrency exchange FTX, ending days of speculation story on Nov. 2 claiming FTX and corporate sister Alameda Research were facing a liquidity problem.
The acquisition, which was publicized in tweets like so much else amid nearly a week of upheaval, brings together two crypto trading powerhouses. FTX was valued at $32 billion earlier this year, and Binance is the largest crypto exchange by volume.
The transaction’s financial specifics were not disclosed, but FTX’s U.S. business – a distinct corporation known as FTX US – is not included in the acquisition.
“Things have gone full circle, and FTX.com’s first and final investors are the same: we have agreed on a strategic deal with Binance for FTX.com (pending DD etc.),” FTX CEO Sam Bankman-Fried tweeted on Tuesday.
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
Binance CEO Changpeng “CZ” Zhao also confirmed the partnership on Twitter, stating that the two exchanges signed a non-binding letter of intent. Both Bankman-Fried and Zhao stated that a comprehensive due diligence procedure will begin within the next several days.
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
More on the Binance – FTX case
The transaction follows a scoop last week that raised concerns that FTX’s corporate sister, Alameda Research, was overly reliant on illiquid tokens, including FTX’s own FTT. Bankman-Fried established and has a majority stake in both FTX and Alameda.
Some observers read the tale to suggest that Alameda’s finances – and hence FTX’s – were not as strong as previously supposed.
Then, on Sunday, Binance’s CEO added to the pressure by indicating he wanted to liquidate his holdings of FTX’s FTT token, since the investigation revealed that FTT made up a large portion of Alameda’s balance sheet.
“Learning from LUNA, liquidating our FTT is merely post-exit risk management,” he tweeted. “We have previously provided assistance, but we will not pretend to make love after divorce. We are not opposed to anyone. However, we will not assist individuals who push against other industry participants behind their backs. Onwards.”
CZ’s decision lowered the price of FTT. Caroline Ellison, CEO of Alameda, then tweeted on Sunday that she will purchase all of Binance’s FTT tokens for $22 apiece in order to reduce the impact on pricing.
The situation deteriorated early Tuesday when FTX clients attempted to withdraw funds. Dozens of consumers expressed their frustrations in FTX’s Telegram group and on Twitter. Roadblocks to withdrawing funds foreshadowed the demise of numerous more cryptocurrency companies in 2022.
Following the transaction, FTX’s FTT token initially surged, but this did not last long; after starting the day just shy of $20, it is now trading at $5.
Expert in: Google Ads, SEM Expert, PPC Specialist, Paid Social, Facebook, Web Design and DeFi. I work exclusively with successful businesses that are looking to take things to the next level or ambitious startups who give themselves the means to do so. I have experience in many verticals: SaaS, finance, cryptocurrency, retail, real estate, law, IT, medical, pharmaceutical, travel and many more.