Binance has consented to assist FTX during its “significant liquidity crunch.”
Sam Bankman-Fried (SBF), the CEO of the exchange, has revealed that the firm is being sold to Binance amidst huge concern over FTX’s capacity to handle withdrawals.
Binance CEO Changpeng Zhao (CZ) has also verified the story, claiming that the exchange would assist FTX in overcoming its present “liquidity bottleneck.”
FTX Comes Full Circle
In a Tuesday Twitter thread, SBF informed followers that the situation had “full circle” and that Binance will be recorded as FTX’s first and final investor. “We have come to an agreement on a strategic transaction with Binance for FTX (pending DD etc.)” said the CEO.
SBF acknowledged reports that the exchange was experiencing difficulty clearing its withdrawal backlog. This contradicts his and FTX’s previous comments that the exchange’s backlog was “returning to normal levels” and assets were “Fine.”
Multiple on-chain monitoring companies discovered on Monday that FTX was suffering net outflows in the hundreds of millions of dollars, while Binance was enjoying nearly the same amount of net inflows. On Tuesday, on-chain statistics revealed that FTX has not processed any Ethereum, Tron, or Solana-based withdrawals for many hours.
The young millionaire said that Binance’s assistance would assist his exchange in resolving difficulties and safeguarding clients.
“This will clear out liquidity crunches; all assets will be covered 1:1,” he confirmed. “This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologise for that.”
SBF praised CZ and Binance for their assistance while denying “rumours” of a publicity war between the two exchanges. CZ indicated that FTX was attempting to advocate against other industry participants behind their backs and threatened to dump Binance’s FTT tokens over the weekend. FTX responded by claiming that CZ’s allegations were false.
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.).
“Binance has shown time and again that they are committed to a more decentralised global economy while working to improve industry relations with regulators. We are in the best of hands,” concluded SBF.
CZ’s Response
CZ stated on Tuesday that Binance and FTX had signed a non-binding Letter of Intent to safeguard customers during the “severe liquidity shortage”
“Binance has the discretion to pull out from the deal at any time,” he clarified. “We expect FTT to be highly volatile in the coming days as things develop.”
FTT fell by more than 30 percent early on Tuesday, but it looks to have recovered significantly after Binance’s purchase transaction was announced.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
Many in the cryptocurrency world thought that Binance manipulated FTX’s liquidity constraint and token collapse to target a weaker rival. CZ disputed these allegations on Monday, asserting that “no one” could be responsible for FTX’s difficulties.
During the crypto bear market, SBF was notorious for using his business to provide rescue agreements to other struggling companies, like Voyager and BlockFi.
He told Forbes in June that there were still a large number of crypto exchanges that were “secretly insolvent,” but he did not name which ones.
