Binance to Acquire FTX Amid Liquidity Crunch
- FTX CEO Sam Bankman-Fried has asked Binance to step in and help it “clear out liquidity crunches” and cover assets on a 1:1 basis.
- Binance has signed a non-binding letter of intent to acquire FTX, and will be going over a full due diligence process in the coming days.
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Cryptocurrency exchange Binance has signed a non-binding letter of intent to acquire rival FTX and clear out its current liquidity crunches, FTX CEO Sam Bankman-Fried (SBF) said via Twitter on 8 October.
According to the announcement, FTX has entered in an “agreement on a strategic transaction” after struggling to clear out its withdrawal backlog, asking Binance to step in and help “clear out liquidity crunches” and cover assets on a 1:1 basis. While the financial terms of the deal were not disclosed, the companies noted that a full due diligence process will be performed in the next couple of days.
SBF noted that the decision was made in order to protect FTX customers, and that this was a “user-centric development” that would benefit the entire crypto industry. He also clarified that the deal will not impact FTX.US, whose withdrawals “are and have been live, is fully backed 1:1, and operating normally”.
Binance CEO Changpeng “CZ” Zhao confirmed the news in his own Twitter thread, noting that this was a “highly dynamic situation” that is being assessed by his exchange in real time, and that Binance had the ability to pull out of the deal at any time. CZ also warned investors that the price of FTX Token (FTT) will be highly volatile in the next few days.
FTX’s problems began on Sunday, when CZ announced Binance will be liquidating all of its FTT holdings due to “post-exit risk management” as part of “learning from LUNA”, which triggered a wave of investors trying to withdraw their funds from the SBF-owned exchange. According to data from Coinglass — which shows the total Bitcoin (BTC) balances of most exchanges — FTX’s BTC balance was brought to almost zero in less than 24 hours. At the time of writing the price of FTT has fallen by more than 55%, and is currently trading for $9.8.
- The New York Jurors took 4 fours of deliberating before pronouncing the former FTX CEO guilty of all seven charges of fraud and conspiracy to commit fraud.
- Bankman-Fried will now have to appear in court on 28 March, 2024, where he will face a potential maximum sentence of 115 years in prison.
Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
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- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
- Joseph Pimbley, a member of litigation consulting firm PF2 Securities, will try to rebuff testimonies from Caroline Ellison, Gary Wang, Nishad Singh, and Adam Yedidia.
- During his testimony Pimbley will try to establish a timeline for the FTX-Alameda line of credit, and convince the jury it fluctuated between $1 billion and $3 billion between 2021 and 2022.