financemagnates.com
Cryptocurrency exchange, Binance has agreed to fully acquire Sam Bankman-Fried-owned cryptocurrency exchange, FTX, following the latter’s liquidity issues.
Binance’s CEO Changpeng Zhao announced on Tuesday that the top cryptocurrency exchange has signed a non-binding letter of intent with the Bahamian cryptocurrency exchange. Zhao said the goal is to “help cover the liquidity crunch”. He added that the exchange will conduct a full due diligence “in the coming days.”
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
Also announcing the deal, Bankman-Fried said the deal is “an agreement on a strategic transaction with Binance for FTX.com.” The billionaire founder's announcement comes after FTX’s problems with liquidity forced it to pause customer withdrawals sparking industry-wide liquidity concerns.
1) Hey all: I have a few announcements to make.
— SBF (@SBF_FTX) November 8, 2022
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.).
Bankman-Fried noted that the need to clear out all of FTX’s “liquidity crunches” and cover all assets 1:1 informed the decision to seek Binance’s help. He added that while this may take a bit of time to settle, “the important thing is that customers are protected.”
The FTX Founder and CEO, however, pointed out that the deal does not cover FTX.US, its American subsidiary. Binance.US, Binance’s subsidiary in the United States, is also not covered in the deal, he noted.
“FTX.us’s withdrawals are and have been live, is fully backed 1:1, and operating normally,” Bankman-Fried said.
The Liquidity Problem
The FTX-Binance deals come a few days after crypto users expressed worries over the liquidity troubles of FTX following problems with withdrawals on the platform.
The concern was further ignited by Zhao’s announcement on Sunday that Binance will be withdrawing the remainder of its $530 million FTX Tokens (FTT).
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ 🔶 Binance (@cz_binance) November 6, 2022
On the withdrawal issue, FTX on Tuesday announced that "queue is decreasing and getting back to more reasonable levels; nodes and banks catching up."
a: we want to thank our team for working tirelessly to process the backlog of withdrawals. See here for context:
— FTX (@FTX_Official) November 8, 2022
https://t.co/fbg2ifBNzH
queue is decreasing and getting back to more reasonable levels; nodes and banks catching up
On Moday, FTX had announced that all of its matching engines were running smoothly although nodes throughput for Bitcoin is limited. The exchange added that it was processing its backlog of stablecoin "creations/redemptions" although this "might be slower” as banks were closed for the weekend.
1: Support updates:
— FTX (@FTX_Official) November 7, 2022