The two crypto exchange giants signed a non-binding letter of intent, Binance CEO Changpeng “CZ” Zhao confirmed on Twitter.
Binance said Tuesday it has signed a letter of intent to acquire FTX, delivering a surprising twist following a public spat between the world’s two largest crypto exchanges that contributed to several digital tokens taking a tumble Tuesday. The firms didn’t disclose the value of the deal, which is non-binding and pending the due diligence process.
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
The deal comes follows Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried’s months-long clash on social media, which escalated earlier this week.
In a series of tweets, Zhao said Tuesday that Binance reached the decision after FTX asked the firm for help. “To protect users, 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,” he said.
Binance, the world’s largest exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two firms started to wither. The two executives have hurled criticism at each other for several months, but the relationship between the two hit an all-time low earlier this week after Zhao revealed that Binance was selling its holding of FTT, the native token of FTX exchange that it had received as part of an exit from the firm last year.
In a tweet, Sam Bankman-Fried said Tuesday: “A *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits 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 said FTX is working on clearing the withdrawal backlog. “This will clear out liquidity crunches; 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,” he said.
Several cryptocurrencies jumped on the news.
The agreement came about as withdrawals by FTX customers became extremely sluggish on Tuesday, with dozens of customers complaining in FTX’s Telegram group and on Twitter about difficulties they experienced getting their funds.
Withdrawals were never paused, however, as shown by on-chain data and according to responses from FTX representatives in the Telegram group. In addition, in his series of tweets announcing the deal with Binance on Tuesday, Bankman-Fried wrote that “FTX.us’s withdrawals are and have been live, is fully backed 1:1, and operating normally.”
On the news, FTX’s FTT token rallied 20% to $17.50 from about $14.50. Binance’s BNB token jumped 8% from $326 to $355. Investors withdrew bitcoin en masse from FTX over the last 24 hours, reducing its balace from about 20,000 bitcoins to just one on Tuesday morning, according to data from Coinglass.
Binance is the world’s most valuable crypto exchange, estimated to be worth over $300 billion. FTX was valued at $32 billion in its most recent funding round (a Series C) in January this year. The firm counts Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, BOND, and Iconiq Growth among its long list of backers.
