Sam Bankman-Fried, Founder and CEO, FTX. Image: Craig Barritt/Getty Images via AFP
Binance, the world’s largest crypto exchange, has issued a letter of intent to acquire the assets of fellow exchange FTX. According to reports, Binance signed a non-binding letter of intent declaring its intention to acquire FTX. This has added an unexpected twist to the days-long public feud between the world’s two largest crypto exchanges. In particular, the feud contributed to the decline of several digital tokens on Tuesday.
Binance CEO Changpeng Zhao announced on Twitter, “This afternoon, FTX requested our assistance. There is a significant liquidity crisis. To protect users, we signed a non-binding LOI, with the intention of fully acquiring and helping to cover the liquidity crunch. . We will conduct a full DD in the coming days.”
On November 7, FTX founder and CEO Sam “SBF” Bankman-Fried took to Twitter to claim that a competitor was spreading false rumors about the crypto exchange. He claimed that “the assets are fine.” He also stated that it has sufficient funds to cover all client holdings and does not invest in client assets, including Treasuries. However, Bankman-Fried himself confirmed the acquisition in a tweet.
He said: “Things have come full circle and FTX.com’s first and last investors are the same: we have agreed a strategic transaction with Binance for FTX.com (pending DD etc).”
Binance was the first investor in FTX. However, as the younger firm grew in popularity, relations between the two began to deteriorate. For months, the two billionaires have exchanged sly remarks. However, the ratio hit an all-time low earlier this week when Zhao announced that Binance was selling its holdings of FTT, the FTX exchange’s native token. It is worth noting that Binance received FTT as part of its exit from the company last year.
The recent agreement heralds a power shift in the crypto world. Rising interest rates, as well as investors’ flight from risk, have worsened the situation. The deal is a victory for Binance founder Changpeng Zhao and a humiliation for FTX founder Sam Bankman-Fried. Before a clash between the two men triggered a chain of events that shook investor confidence in FTX, the company had grown in size and recognition.
While the acquisition is certainly welcome news for FTX users worried about their money being frozen on the exchange, it also means that FTX and quantitative trading firm Alameda Research are unlikely to meet their debt obligations if creditors call in their loans. Bankman-Fried also founded Alameda Research.
Users on Twitter hailed the acquisition, saying “CZ just pulled off the most gangster play we’ve seen in Crypto, ever, period.” The move was also compared to Elon Musk’s Twitter acquisition of the crypto community.
The author is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
Check out our festive offers of up to Rs.1000/- off website prices on subscriptions + gift voucher worth Rs 500/- from Eatbetterco.com. Click here to know more.
