Binance Set To Rescue Crypto Rival FTX After ‘Cash Crisis’

Binance has agreed to buy rival cryptocurrency exchange FTX after a spike in customer withdrawals sparked a liquidity crunch at Sam Bankman-Fried’s company.

Binance General Manager Changpeng “CZ” Zhao wrote on Twitter that FTX had “asked for our help”, adding, “There is a major liquidity crunch.” Binance has signed a letter of intent to buy FTX but said he had “the discretion to withdraw from the agreement at any time”.

FTX reached a valuation of $32 billion earlier this year, with blue chip investors such as BlackRock, Ontario Teachers’ Pension Plan of Canada and SoftBank backing the company.

The deal with Binance ends a volatile and very public row between Bankman-Fried and Zhao – two of the most powerful figures in the crypto industry – and will combine two of the largest crypto exchanges in the world.

FTX’s troubles accelerated over the weekend when Binance said it intended to offload its FTT token holdings from FTX, citing concerns about the exchange’s financial stability and sending the stock price plummeting. token price.

Bankman-Fried responded Monday, saying a “competitor is trying to sue us with false rumors.” He added that he would “love it” if he could work with Zhao “together for the ecosystem.”

The FTX chief also attempted to calm the markets saying, “FTX is doing well. Assets are doing well.

But on Tuesday, he tweeted, “CZ has done, and will continue to do, incredible work building the global crypto ecosystem and creating a freer economic world.” FTX confirmed the deal; the two companies did not immediately disclose the terms.

If completed, the deal will leave Binance as the largest crypto trading platform.

“This makes Zhao the most powerful player in crypto,” said Ilan Solot, co-head of digital assets at Marex Solutions. “Zhao’s worldview will matter a lot more, in terms of how he wants to interact with regulators and policymakers. . . the weight of his opinions will be much more powerful.

The crypto industry has struggled over the past year, especially since the failed terra and luna tokens in May. The price of flagship bitcoin and ether tokens plunged and several major companies collapsed, including lender Celsius Network and hedge fund Three Arrows Capital.

The bailout deal is also a major setback for Bankman-Fried, who has long been seen as a relatively stable and ambitious figure in the often fragile world of crypto.

In the wake of this year’s crypto market crash, he earned a reputation as an industry savior after helping struggling businesses. In June, the FTX chief announced a $250 million loan to struggling crypto lender BlockFi.

The loan follows additional help for crypto broker Voyager Digital, which was rescued by an FTX loan worth around $485 million in cash and bitcoins.

But Bankman-Fried’s ambitions also extended to traditional markets: its exchange sought to disrupt the trading of Wall Street futures and stocks, buying a stake to Robinhood, the retail broker.

In 2021, FTX signed a 19-year agreement to rename the Miami Heat Arena to FTX Arena. In 2021, Bankman-Fried said buying Goldman Sachs was “not at all out of the question”.

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