Facing a liquidity crisis, the cryptocurrency exchange FTX has reached a preliminary agreement to be acquired by rival Binance, though specific details of the deal remain undisclosed.
FTX’s CEO, Sam Bankman-Fried, and Binance’s Changpeng Zhao confirmed the agreement via Twitter. Bankman-Fried announced, “Things have come full circle… we have come to an agreement on a strategic transaction with Binance (pending due diligence).”
Zhao elaborated that FTX requested assistance amid a significant liquidity crunch, stating, “To protect users, we signed a non-binding letter of intent, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting thorough due diligence in the coming days.”
It is important to note that the agreement does not involve the U.S. branches of either company, with Bankman-Fried assuring that FTX US’s operations, including withdrawals, are functioning normally and fully backed on a 1:1 basis.
Recently, FTX has experienced a surge in withdrawal requests, raising concerns about its operational stability. The digital exchange’s native token, FTT, saw a dramatic 30% drop in value after Binance announced its plan to sell off its holdings of the token.
In response to speculation about a conflict between their exchanges, Bankman-Fried stated, “I know there have been rumors in media… however, Binance has shown time and again their commitment to a decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.”