Following days of rumours, heavyweight Twitter spats, and a frenzied bank run, Binance CEO Changpeng Zhao (CZ) has confirmed his exchange will fully acquire Sam Bankman-Fried’s (SBF) FTX exchange, pending proper due diligence. If this deal goes ahead as planned, it would see the two largest crypto exchanges in the world merge into a single entity.
CZ tweeted Tuesday that FTX had reached out to request help from Binance following what he described as “a significant liquidity crunch” triggered by a rush of customers withdrawing their funds from FTX.
CZ agreed to offer assistance and stated: “to protect users, we signed a non-binding LOI (letter of intent), intending to fully acquire FTX.com.”
SBF Confirms Forced Sale
In a Twitter thread of his own, SBF confirmed the news and said the Binance takeover would ensure customers assets are protected.
Despite the tense exchanges between SBF and CZ over the past few days, SBF went out of his way to thank CZ for his help and praised him for the work he has done to grow the crypto industry.
SBF also clarified that Binance.us and FTX.us would be unaffected by this deal, noting that FTX.us continue to operate as normal.
How Did This Happen?
Somewhat ironically, FTX’s troubles really began on Sunday when CZ tweeted that Binance would be unloading its holdings of FTX’s exchange token FTT, valued at around US$580 million, due to what he described as “recent revelations”. Those revelations referred to reports casting doubt on the financial security of SBF’s trading company, Alameda Research — suggesting FTX itself may be in financial peril.
Unsurprisingly, these tweets spooked a crypto market still very much shaken by the numerous high profile collapses in the past few months, leading to a bank run on FTX.
SBF hit back, accusing a “competitor” of trying to topple FTX with false rumours of financial problems. Customers however, preferring to be safe than sorry, continued to withdraw their assets from FTX up until Tuesday morning when the exchange suspended withdrawals, before announcing later that day that it would be acquired by Binance.
Both CZ and SBF insist all customer funds will be safe under the new deal with SBF tweeting, “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.”
This episode demonstrates just how volatile and unpredictable the crypto market currently is. Mere weeks ago SBF was flying high as one of the world’s youngest billionaires — appearing on the cover of Fortune magazine and donating millions to political parties, now his empire lies in ruins, destroyed in the space of just a few days.
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