Binance chief Changpeng Zhao announces purchase of FTX

Sam Bankman-Fried and Changpeng Zhao announced a strategic partnership. It is intended to resolve the liquidity crisis and envisages a possible acquisition of the FTX exchange by Binance.

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 https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.

— CZ 🔶 Binance (@cz_binance) November 8, 2022

“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 FTX.com. In the coming days we will conduct a full due diligence“, — Zhao wrote.

He described the current situation around the exchange as “very dynamic”, with the assessment “taking place in real time”.

“Binance reserves the right to walk away from the deal at any time. We expect FTT to be very volatile in the coming days,” Zhao added.

FTX chief Sam Bankman-Fried confirmed the information about the strategic agreement aimed at addressing a number of problems.

“Our teams are working to clear the backlog of withdrawal requests. This will resolve the liquidity crisis; all assets will be fully backed 1:1. This is one of the main reasons we turned to Binance. It may take some time. We apologise for this,” Bankman-Fried wrote.

He added that he was aware of rumors of a conflict between the exchanges.

5) 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.

— SBF (@SBF_FTX) November 8, 2022

“I know that there have been rumors in the media of a conflict between our two exchanges. However, Binance has repeatedly demonstrated its commitment to a more decentralized global economy, while working to improve relations with regulators. We are in safe hands,” said the head of FTX.

In conclusion to the thread, Bankman-Fried stressed that FTX US and Binance.US are separate companies not affected by the aforementioned agreement.

6) (Note that https://t.co/fCrWGQ4y7w and https://t.co/Ju8CkfrLYH–two separate companies–are not currently impacted by this. https://t.co/fCrWGQ4y7w’s withdrawals are and have been live, is fully backed 1:1, and operating normally.)

— SBF (@SBF_FTX) November 8, 2022

The market reacted to the news with a sharp rally. Bitcoin rose by about $1,000 in an hour, back above $20,000.

8 November 2022 | 20:21Update:

Bitcoin price fell below $19,000.

8 November 2022 | 21:39Update:

Ahead of the publication of Zhao’s and Bankman-Fried’s tweets, memes circulated online, ironising the current situation.

Earlier the utility token FTT fell about 30% — from above $22 to below $16.

The plunge occurred amid rumors of a showdown between the two exchanges and concerns about FTX’s financial stability. At the same time Bitcoin fell below the $20 000, dragging the rest of the market.

On November 6, Binance CEO Changpeng Zhao stated that the company aimed to shed FTT. Assets along with BUSD totaling about $2.1 billion became the result of the company exiting its portfolio investment in FTX.

He emphasised that the decision is not aimed at the competitor, as Binance regards maintaining the stability of the developing industry as important.

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