Changpeng Zhao, the chief executive of Binance, announced on Tuesday that the business had signed a non-binding agreement to purchase FTX.com, a division of competitor FTX, to assist address a liquidity bottleneck at the cryptocurrency exchange.
Zhao tweeted that FTX requested assistance this afternoon. There is a significant liquidity crunch, which has caused them to agree to a non-binding LOI for them to complete the acquisition of it and resolve the issue. A thorough due diligence process will be taking place in the near future to ensure consumer protection.
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
The agreement comes after a prolonged social media spat between Binance CEO and FTX founder that worsened earlier this week. The original investor in FTX was Binance, but as the latter company gained notoriety, ties between them began to deteriorate.
The clash between the two billionaires has been heated for some time now. It escalated even further this week after Binance revealed that it sold its holdings of FTX tokens, which had been given to them as part of their departure from the company last year.
Zhao confirmed persistent speculation concerning Alameda Research’s financial stability when he stated that the company was selling off its FTT assets as post-exit risk management.
Alameda, an investment bank and proprietary trading firm owned by Bankman-Fried, is exposed to FTT tokens. According to Binance’s observation on Tuesday morning, the price of the FTT token had dropped from $25.47 earlier in the day to as low as $14.32 before recovering back up to its previous value later that afternoon.
A research firm based out of New York called Bernstein also issued a report claiming that the exchange should shut down Alameda due to investor concerns over the currency in which they traded these assets when it released its findings yesterday morning.
Bankman-Fried Expressed Regret For The FTX Issue
Sam Bankman-Fried, the CEO of FTX, also acknowledged the acquisition on Twitter. They have agreed to a strategic deal with Binance for FTX.com, per Bankman-Fried, or SBF (known in the crypto community). He claimed that things have gone full circle and that FTX.com’s initial and last investors are the same.
However, Zhao stated in the tweet’s comment section:
There is a lot to cover, and it will take some time. It 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.
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
Bankman-Fried apologized for the company’s problem and stated that their staff is now trying to eliminate the withdrawal backlog. Liquidity shortages will be eliminated, and all assets will be covered exactly.
Additionally, one of the key causes for their request for Binance to enter is this. They apologize that it could take some time for things to settle. But they also noted that the consumers’ interests would be safeguarded.
Related Reading | Binance CEO Says ‘No’ To Selling FTT Through OTC
Moreover, the financial health of the company has been the topic of much discussion in the cryptoverse recently due to worries over liquidity, which has had a significant influence on the crypto market.
The FTX CEO assured his cryptocurrency investors that FTX.us and Binance.us. These two independent businesses are not now affected by this in an effort to allay their concerns. Additionally, FTX.us’s withdrawals are and have always been active, fully backed 1:1, and in good working order.