Binance to acquire FTX.com

Binance announced on Tuesday that it has signed a non-binding agreement to acquire one of its competitors, FTX.com, to “cover the liquidity crunch.”

It however said that the acquisition is subject to a full due diligence which is coming up in a couple of days. The Binance CEO, Changpeng Zhao, said that “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.”

The acquisition is as a result of the three-year old crypto exchange’s request for help after facing liquidity crunch. Concerns about FTX’s financial health reportedly triggered $6bn (£5.2bn) of withdrawals in just three days.

The panic withdrawals were in part due to a tweet on Sunday from Binance CEO that Binance would sell its holdings of FTX’s digital token, known as FTT.

He said “Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.” “We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.” FTT has lost almost 80% of its value this week.

Founded in 2019 by Sam Bankman-Fried and Gary Wang, FTX.com is a cryptocurrency exchange company that develops a platform for professional trading firms.

FTX.com’s CEO Sam Bankman-Fried corroborated the acquisition story on Twitter saying, “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.)”

He continued with the following tweets:

“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.”

“But the important thing is that customers are protected.”

“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.”

“I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.”

Sam Bankman-Fried ended by saying that “FTX.us and Binance.us – two separate companies – are not currently impacted by this. FTX.us’s withdrawals are and have been live, is fully backed 1:1, and operating normally. “