Binance, the world’s largest cryptocurrency company, has reached a deal to buy rival cryptocurrency exchange FTX to rescue it from a liquidity crunch, for an undisclosed amount.
Binance CEO Changbig Zhao tweeted Tuesday that there is a “severe liquidity crunch” that has hit the FTX exchange and that after the latter requested Binance’s help, the company signed a “non-binding agreement” with the intent of “completely acquiring http://FTX. com and help cover the liquidity crisis.
Zhao added that Binance, which was initially based in China but now claims to have no official headquarters, will do its best to rescue FTX in the coming days, and the company is free to opt out of the deal at any time.
Sam Bankman-Fried, the owner of FTX, confirmed the deal in a tweet.
The deal represented the catastrophic downfall of a company that earlier this year was valued by private investors at $32 billion and was hoping to carve out its way to becoming a crypto giant.
Months earlier, Sequoia Capital and BlackRock backed FTX with nearly $25 billion. Forbes estimated Bankman-Fried’s net worth at $17 billion, most of which comes from his stake in FTX.
Bankman-Fried told CNBC in September that while FTX is not “immune” from cryptocurrency declines, it has been in a better position compared to its competitors. Because it captured most of the market.
Binance and its founder were among the first investors in FTX, and Bankman-Fried said that Binance will be the first and last investor in FTX.com.
This and the acquisition is believed to affect only the non-US branch of the company: FTX.com. The US subsidiary: FTX.us will remain independent of Binance, noting that FTX is based in the Bahamas, where Bankman-Fried resides.
News of the deal saw the value of FTX’s FTT virtual tokens rise by 26 percent, while the value of Paynas’ BNB tokens increased by 20 percent over the same time period.
Zhao said in a tweet that he expects FTT to be “extremely volatile in the coming days as things develop.”
Today, Tuesday, FTX suspended withdrawals from its platform, after terrified investors tried to withdraw their money. Investors’ confidence was shaken when Zhao tweeted in recent days that the company would sell its FTT holdings.