Binance’s CEO Changpeng Zhao (CZ) announced in a tweet that his company is in the process of acquiring fellow centralized crypto exchange FTX. FTX had earlier paused withdrawals further suggesting that the company was indeed insolvent and now, this move by Binance has all but confirmed the rumors. According to CZ, FTX “approached Binance for help” in response to a “significant liquidity crunch” which is a buzzword for ‘insolvency.’ He further stated that his company has signed a non-binding Letter of Intent (LOI) to acquire FTX fully and a full Due Diligence would be conducted in the coming days prior to the acquisition.
FTX’s CEO Sam Bankman-Fried (SBF) also confirmed this news in a tweet. According to him, FTX has “come to an agreement on a strategic transaction” with Binance following attempts to clear out its withdrawal backlog. SBF stated that he had asked Binance to come in to help clear out its “liquidity crunches” and cover assets on a 1:1 basis.
This development comes after both exchanges had gone head-to-head in a metaverse spat. Binance CEO Changpeng Zhao had announced on Sunday in a tweet that his company would liquidate its remaining FTX tokens (FTT) following “recent revelations” with many believing that was in reference to rumors that FTX and its sister company Almeda Research were insolvent. On the other hand, FTX CEO Sam Bankman-Fried had also taken to Twitter to quell these rumors of insolvency and categorically stated that FTX was “fine.”
Binance is the number one cryptocurrency exchange in the world, while FTX holds the number two spot. FTX and SBF were also major proponents in propping up the industry amongst the LUNA and 3AC-induced crash, and it is shocking to see the company experience a liquidity crisis themselves. If this acquisition between Binance and FTX does go through, Binance would gain considerable power and users from within the industry.
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