Following a liquidity crisis at the company led by billionaire Sam Bankman-Fried, which resulted in increased withdrawals and financial difficulties, Binance is set to acquire cryptocurrency exchange FTX.
Binance CEO Changpeng Zhao stated on Twitter, “This is a highly dynamic situation, and we are assessing the situation in real time.” Binance reserves the right to withdraw from the transaction at any time. We anticipate that FTT will be extremely volatile in the coming days as events unfold.”
The announcement comes after a period of testing for FTX, whose FTT token fell 30% on Tuesday.
“FTX asked for our assistance this afternoon,” Binance CEO Changpeng Zhao tweeted. “There is a severe liquidity crisis. To protect users, we signed a non-binding (letter of intent) with the intention of completely acquiring FTX.com.”
Binance announced its intention to sell its token holdings over the weekend, raising concerns about FTX’s financial health. “We have reached an agreement with Binance on a strategic transaction,” Bankman-Fried tweeted on Tuesday, adding that “CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem and creating a freer economic world.” FTX confirmed the transaction.
Meanwhile, in response to the acquisition, Binance’s native token BNB surged more than 20% in minutes.
It should be noted that SBF stated that FTX has reached a “agreement on a strategic transaction” with Binance but did not provide a timeline for when the acquisition will be completed. SBF assured customers that their funds would be safe while Binance and FTX worked to clear the withdrawal backlog.