Binance said Tuesday it has signed a letter of intent to acquire FTX, delivering a surprising twist following a public spat between the world’s two largest crypto exchanges that contributed to several digital tokens taking a tumble Tuesday. The firms didn’t disclose the value of the deal, which is non-binding and pending the due diligence process.
The deal comes follows Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried’s months-long clash on social media, which escalated earlier this week.
In a series of tweets, Zhao (pictured above) said Tuesday Binance reached the decision after FTX asked the firm for help. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” he said.
Binance, the world’s largest exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two firms started to wither.
The two billionaires have hurled snarky remarks at each other for several months, but the relationship between the two hit an all-time low earlier this week after Zhao revealed that Binance was selling its holding of FTT, the native token of FTX exchange that it had received as part of an exit from the firm last year. Zhao said the firm was liquidating its FTT holdings as a “post-exit risk management,” giving some credence to a widely-circulated rumor about Alameda Research’s financial health.
Bankman-Fried founded the prop trading and market making firm Alameda, which has some exposure to the FTT tokens. FTT token slid to as low as $14.32 from $25.47 earlier on Tuesday, according to Binance’s trading view.
In a tweet, Sam Bankman-Fried said Tuesday: “A *huge* thank you to CZ, Binance, and all of our supporters. 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.”
Bankman-Fried said FTX is working on clearing the withdrawal backlog. “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,” he said.
Several cryptocurrencies jumped on the news.
Binance is the world’s most valuable crypto exchange, estimated to be worth over $300 billion. FTX was valued at $32 billion in its most recent funding round (a Series C) in January this year. The firm counts Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, BOND, and Iconiq Growth among its long list of backers.
(More to follow)
Crypto giant Binance to acquire FTX following ‘liquidity crunch’ by Manish Singh originally published on TechCrunch