FTX to Be Acquired by Binance, Revealed in Unexpected Letter of Intent
FTX, in an unexpected twist, was announced by Binance on Wednesday to be acquired through a letter of intent.
The past 48 hours have been tumultuous for the industry, witnessing clashes between the two exchanges and their respective CEOs, resulting in an “exchange war.”
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Initially, as the world’s largest cryptocurrency exchange, Binance was the first investor supporting FTX. However, as competition intensified, the relationship dwindled.
In recent months, the two CEOs engaged in social media spats, reaching a new low this week when CZ announced Binance’s intention to liquidate their substantial FTT position (FTX’s native token). This move followed rumors about dire financial conditions in FTX and Alameda’s balance sheets. CZ termed the exit as “post-exit risk management.”
The decision to acquire FTX was explained as a move “to protect users.” CZ tweeted, “We signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD 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 🔶 BNB (@cz_binance) November 8, 2022
SBF expressed “huge thanks” to CZ and Binance, stating that the deal was “a user-centric development benefiting the entire industry.”
“CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem and creating a freer economic world,” Bankman-Fried remarked in a tweet:
1) Hey all: I have a few announcements to make.
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.).
— SBF (@SBF_FTX) November 8, 2022
Despite the temporary resolution, the announcement has shocked both the business world and the cryptocurrency space. Bitcoin’s overnight trading dipped from $20.6k/USD to a new low of $16.8k/USD, triggering a market downturn when things appeared relatively stable.
2022 has seen its share of painful developments, but this development is among the most staggering. SBF was hailed as a “crypto savior” earlier in the year. FTX was valued at $32 billion in its recent funding round (Series C) in January. The company boasts a long list of backers, including Sequoia, BlackRock, Tiger Global, and others, having raised over $2.2 billion across various funding rounds for FTX and its FTX US business, as reported by Web3 Signals, a cryptocurrency dealbook.
FTX Ventures is a significant investor in numerous cryptocurrency startups like Aptos Labs, Messari, Sky Mavis, LayerZero, YugaLabs, and 1inch Network.
As Sam mentioned, “I know that there have been rumors in the media of conflict between our two exchanges; however, Binance has consistently shown its commitment to a more decentralized global economy while working on improving industry relations with regulators. We are in good hands.”
Let’s hope stability returns from here!
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