Binance Plans To Acquire FTX After Insolvency Concerns Sparked Market Rout

FTT and BNB Rally 26% and 12% Respectively

Binance, the world’s largest crypto exchange, has signed a letter of intent to acquire competitor FTX after concerns that the exchange didn’t have enough liquidity sparked hundreds of millions of customer withdrawals and a slump in its native FTT token. 

Binance founder Changpeng Zhao, who further fueled FTX turmoil by laying out plans for Binance to sell its FTT holdings, on Tuesday morning announced plans to fully buy the Bahamas-based exchange in a tweet. 

“To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,”  Zhao, better known as CZ, tweeted just after 11 a.m. New York time. “We will be conducting a full DD [due diligence] in the coming days.” 

FTT and Binance’s BNB token rallied after the announcement, jumping 26% and 12%, respectively. Ether and Bitcoin rose 7% and 3%, respectively. 

In his own announcement, FTX founder Sam Bankman-Fried said things had come “full circle.” 

“FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance forFTX.com,” he tweeted. “I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.”

The deal would not impact FTX’s US business, which is a separate entity, Bankman-Fried added. 

Binance has the discretion to pull out of the deal at any time, according to CZ.  

“There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real-time,” he tweeted.