Binance to acquire rival, FTX amid liquidity scare

Acquah Nana Yeboah -

Binance, the world’s largest cryptocurrency firm, has reached a deal with FTX, to buy the rival crypto exchange for an undisclosed amount. This deal is expected to rescue the company from a liquidity crisis.

Update: (9:30PM GMT +1) - Binance has announced that it "will not pursue the potential acquisition of FTX.com," citing the latest news reports regarding mishandled customer funds and alleged US agency investigations.

  • In a tweet, Binance CEO, Changpeng Zhao disclosed that “there is a significant liquidity crunch” at FTX and that after FTX asked for Binance’s help, the company “signed a non-binding” agreement with the intent “to fully acquire FTX and help cover the liquidity crunch.”
  • The deal marks an anticlimactic collapse for a company that was valued by private investors at $32 billion, with plans to become a crypto giant through acquisitions.
  • The deal comes in the wake of a CoinDesk scoop last week that triggered concern that the balance sheet of FTX's corporate sibling, Alameda Research, was too heavily reliant on illiquid tokens including FTX's own FTT. Both FTX and Alameda were founded and are largely owned by Bankman-Fried.
  • Thereafter, investor confidence was shaken when Zhao tweeted that the company would sell its holdings of FTT.
  • The deal, according to Tweets from both Zhao and Bankman-Fried, rests on a non-binding letter of intent, pending full due diligence.
  • The acquisition will only include the non-US arm of FTX, and FTX.us will continue to be independent of Binance.