Binance, the largest cryptocurrency exchange in the world, has signed a nonbinding agreement to purchase FTXcom, a unit of major rival FTX, after a lengthy feud on Twitter the last few days.
According to Binance CEO Changpeng Zhao on Tuesday, the purchase will help cover a “liquidity crunch” at Binance.
“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.,” CZ wote on Twitter.
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 FTX Deal
Bankman-Fried on Twitter noted that the deal excludes FTX US and Binance US, the respective US operations of each cryptocurrency exchange.
“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,” said Binance CEO.
The deal would combine two of the world’s largest cryptocurrency exchanges. CoinGecko data shows that Binance and FTX combined for $34 billion in trading volume on Tuesday morning.
Zhao and Bankman-Fried both confirmed that their respective teams would conduct due diligence on the deal.
“ Hey all: I have a few announcements to make. Things have come full circle, and http://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.),” said Bankman-Fried on Twitter.
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
Agreeing on Strategic Transaction
In his own thread on Twitter, Bankman-Fried confirmed the agreement, saying that the exchanges had reached a “strategic transaction,” and on Tuesday morning, the exchange suspended withdrawals due to a backlog.
“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 apologize for that.”
In his message, he expressed his gratitude to CZ, Binance, and all of their supporters, saying “This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.”