The world’s largest cryptocurrency exchange Binance announced a non-binding, letter of intent to acquire its rival exchange FTX on Tuesday.
Binance founder and CEO Changpeng Zhao (CZ) said in a tweet, “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.”
Zhao also said “There is a significant liquidity crunch. To protect users, we signed a non-binding LOI (letter of intent), intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days”.
After this news, the Binance coin (BNB) rose to $370 which is approximately a 12% increase in one hour, and the official coin of FTX, FTT rose to $22 which is approximately a 37% increase in one hour.
Zhao said there that there is still a lot to cover and this will take some time to settle up. During this highly dynamic situation, we are accessing it in real-time. He also said the FTT token will be highly volatile in the coming days as things will develop.
Sam Bankman-Fried CEO of FTX said, “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 http://FTX.com (pending DD etc.)”.
How This Situation Came:
In August 2022, the United States Federal Deposit Insurance Corporation (FDIC) issued cease-and-desist letters to five crypto companies over “false and misleading statements” and FTX is also one of them.
In its report, FDIC mentioned that “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names”.
Now after the announcement by CZ, Binance and FTX teams are working on clearing out the withdrawal backlog as is. Bankman-Fried said before this there were some media conflicts between both these exchanges, but Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. He also said now we are in the best of hands.