Crypto Rival Signs Letter of Intent to Acquire FTX Exchange Amid 'Liquidity Crunch' Bankman-Fried in a tweet disclosed that the deal would affect the non-U.S. businessmen of FTX and Binance as the US arms of each company remain unaffected
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Binance on Tuesday announced to have signed a letter of intent to acquire its rival, FTX. The decision comes as an interesting twist in the complicated relationship shared by Binance and FTX with both the companies holding the top two spots of crypto exchanges globally.
Changpeng Zhao (CZ) took to Twitter to announce the signing of the letter of intent to help with the liquidity crunch of FTX.
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
Binance was the first investor that backed Sam Bankman-Fried and FTX. However, growing popularity and stature started to affect the relationship between the two companies. The relationship hit rock-bottom when Binance announced the liquidation of holdings of FTT, FTX's native token that Binance received as a part of exit from the company last year.
Binance described the move as its 'post-exit risk management'. The move gave credence to the popular rumour about Alameda Research's financial health. However, Alameda Research and Bankman-Fried refuted the claims. The concerns of FTX's financial health reportedly triggered $6 billion of withdrawals in three days.
Bankman-Fried is also the founder of prop trading and market making company called Alameda. FTT tokens witnessed a major drop in its valuation from $25.47 to $14.32 on Tuesday, according to Binance's trading view. The reason of the drop in valuation was cited as the loss of faith by investors in the company.
The financial details of the deal have not been disclosed as of yet. FTX was valued at $32 billion and had surpassed Coinbase this year and claimed the number two spot.
Bankman-Fried in a tweet disclosed that the deal would affect the non-U.S. businessmen of FTX and Binance as the US arms of each company remain unaffected. The deal is not yet complete and due diligence would required to complete it.
1) Hey all: I have a few announcements to make.
— SBF (@SBF_FTX) November 8, 2022
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.).
In the light of these events, Bitcoin dived to $17300.80, its lowest valuation since November 2020. Ether also witnessed a dive to $1228.89.
