Binance has agreed to buy rival cryptocurrency exchange FTX after a surge in customer withdrawals caused a liquidity crisis at Sam Bankman-Fried’s company.
Binance CEO Changpeng “CZ” Zhao tweeted that FTX had “requested our help,” adding, “There is a significant liquidity crisis.” Binance signed a letter of intent to buy FTX, but said it had “the discretion to withdraw from the deal at any time.”
FTX hit a $32 billion valuation earlier this year, with blue-chip investors including BlackRock, the Ontario Canada Teachers’ Pension Plan and SoftBank backing the company.
The Binance deal ends an explosive and very public dispute between Bankman-Fried and Zhao – two of the most influential figures in the crypto industry – and will bring together two of the world’s largest crypto exchanges.
FTX’s woes accelerated over the weekend when Binance said it intended to offload its holdings of the FTT token to FTX, citing concerns about the exchange’s financial stability and sending the token’s price tumbling.
Bankman-Fried responded Monday, saying “a competitor is trying to go after us with false rumors.” He added that he would be “delighted” to work with Zhao “together for the ecosystem.”
The FTX boss also tried to calm the markets, saying: “FTX is fine. Assets are fine.”
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 terms.
If completed, the deal will leave Binance as the largest platform in crypto trading.
“This elevates Zhao as the most powerful player in crypto,” said Ilan Soloth, co-head of digital assets at Marex Solutions. “Zhao’s view of the world will matter much more in terms of how he wants to interact with regulators and policymakers.” . . the weight of his views will be much more powerful.
The crypto industry has been struggling over the past year, especially after the terra and luna tokens failed in May. The price of leading tokens Bitcoin and Ether collapsed and several major companies collapsed, including lender Celsius Network and hedge fund Three Arrows Capital.
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The bailout deal is also a major setback for Bankman-Fried, who has long been considered a relatively stable and ambitious figure in the often-volatile world of crypto.
In the wake of this year’s crypto market crash, he earned a reputation as the savior of the industry after helping failing companies. In June, the FTX boss announced a $250 million loan for struggling crypto lender BlockFi.
The loan followed a further bailout for crypto broker Voyager Digital, which was bailed out by a loan from FTX worth about $485 million in cash and bitcoins.
But Bankman-Fried’s ambitions extended to traditional markets: His exchange tried to shake up futures trading and Wall Street’s stock markets by buying a stake in Robinhood, the retail brokerage.
In 2021, FTX signed a 19-year contract to rename the Miami Heat Arena to FTX Arena. In 2021, Bankman-Fried said that buying Goldman Sachs “is not at all out of the question.”
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