Binance To Buy FTX

Binance, the world's largest cryptocurrency exchange by volume, has agreed to buy FTX, a rival crypto exchange. FTX is apparently facing a “liquidity crunch” of some kind, which is the main catalyst for the acquisition. 

The terms of the acquisition were not disclosed, although two key figures have confirmed the deal. Changpeng Zhao, the CEO of Binance, and Sam Bankman-Fried, the CEO of FTX, have taken to Twitter to announce the deal.

A Clash Of Two Titans

Both Changpeng Zhao and Sam Bankman-Fried are two of the most powerful and influential figures in the cryptocurrency sector. This acquisition is interesting when you consider that the two were taking shots at each other on social media over the past several days. 

Zhao took to Twitter to announce that Binance would liquidate the remainder of its FTT token holdings. For those unaware, the FTT token is the native token of the FTX exchange founded by Sam Bankman-Fried. Zhao, known as “CZ” in the crypto industry, referenced “recent revelations that came to light” and even compared FTT to the failed LUNA token. 

The two shared a business relationship before this deal. Specifically, Binance invested in FTX in 2019 but exited in July 2021. Sam Bankman-Fried, or “SBF,” made it clear that he would still love for the two to “work together for the ecosystem.”

Rumors About FTX

But how did we get here? How did we witness two crypto titans have it out for each other? This all started because of a damaging report on Alameda Research, a quantitative trading firm led by Bankman-Fried, released several days ago.   

Coindesk reported that the majority of the net equity of the company was based on FTT, the native token of FTX, sparking rumors about insolvency. It was also revealed that the research firm counts FTT tokens as assets that aren’t even in circulation yet. 

Sam Bankman-Fried has previously faced criticism from other high-profile figures in the crypto sector due to his cries for more crypto regulation. SBF's critics suggest he does not value the principle of decentralization that many cryptocurrency advocates hold dear. 

SBF assured the masses with a tweet stating: “FTX is fine. Assets are fine.” However, concerns mounted when FTX users noticed that the exchange was halting withdrawals. Also, it was revealed that FTX’s stablecoin reserves had decreased by a staggering 93%, suggesting deeper issues at the crypto exchange.

It All Comes Full Circle

Somehow, it looks like all has been resolved. Binance has entered a “non-binding LOI” to acquire FTX. Binance still can pull out of the deal but will reportedly be conducting due diligence over the next several days. However, this decision only impacts FTX’s non-US entities, and FTX.us will remain independent from Binance. 

“Things have come full circle, and FTX.com’s first and last investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com,” said Bankman-Fried in a tweet. He added that the acquisition was “pending DD (due diligence).”

Update: As of November 10th, 2022, it appears as though Binance has now backed out of the deal to acquire FTX.