Following a months-long social media feud between Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried, Zhao announced on Tuesday that his company has signed a non-binding LoI (Letter of Intent) to fully acquire rival cryptocurrency exchange FTX.
It all started last week with a CoinDesk report revealing Alameda’s balance sheet has a significant amount of FTX assets, particularly the native token FTT.
Binance to buy FTX. How did we get here? It started last week with a @CoinDesk scoop revealing crypto trading giant Alameda Research’s balance sheet had significant value tied to sister crypto exchange FTX’s $FTT token… which is backed by nothing. 1/6https://t.co/Q0ajY6raak https://t.co/gM39tJAYnj
— Christine Lee (@christinenews) November 8, 2022
Earlier this week, Zhao announced that Binance was selling its holdings of FTT, the native token of the FTX exchange, which it received as part of a past exit from the firm. Zhao stated that the company was liquidating its FTT holdings as part of its “post-exit risk management.”
Although Alameda and Bankman-Fried had previously dismissed such concerns, FTX has halted withdrawals as panicked investors attempt to withdraw funds from the exchange.
However, on Tuesday, FTX reached a bailout deal with larger rival Binance after a surge in withdrawals caused a “significant liquidity crunch.” Concerns about FTX’s financial viability allegedly prompted $6 billion in withdrawals in just three days.
Zhao stated that Binance made the decision after FTX approached the crypto behemoth for support. “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 in a tweet.
FTX CEO SBF (Sam Bankman-Fried) said that things had come full circle, and FTX’s first and last investors are the same. “We have come to an agreement on a strategic transaction with Binance for FTX (pending DD etc),” he said.
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
SBF expressed “huge thanks” to Zhao and Binance, calling the transaction “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,” The FTX CEO added.
He assured users that the situation does not currently impact FTX and Binance and that Withdrawals from FTX are and have been live, fully backed 1:1, and are operating normally.
