Changpeng "CZ" Zhao, Binance CEO, announced that the cryptocurrency giant has inked a contract to buy rival FTX. A tweet by CZ stated FTX "called for our help," and that Binance has signed a non-binding letter of intent to acquire FTX "to protect users" owing to "a serious liquidity constraint."
The company had "come to an agreement on a strategic deal with Binance for FTX downfall," according to FTX CEO Sam Bankman-Fried, who also added in a tweet, "Things have gone full circle." Binance was an early strategic investor in FTX, but FTX bought out its interest in the company last year, citing a disagreement over regulatory matters, according to Bankman-Fried. The news comes after a Twitter spat between the two crypto titans over concerns about the financial situation of Alameda Research, the trading firm established by Bankman-Fried. "Binance was selling its holdings of FTX's native FTT currency," CZ revealed.
Fighting insolvency discretely is FTX and sibling business Alameda Research. It was made known to the crypto community after CoinDesk revealed the specifics of Alameda's balance sheet. FTX Token was the firm's main source of support for its whole empire (FTT).
As a post-risk management step amid the midst of these terrifying findings, Binance started a significant sell-off of $585M worth of FTT. The price of FTX Token then started to plunge. Notably, FTT fell by more than 70% in the 24 hours following the acquisition news. The collapse of the FTX token appears to be a repeat of the fall of the Terra token in May.
FTX's approach throughout this difficult time was comparable to Celsius' in that it delayed disclosing its troublesome circumstances. In reaction to these potential outcomes, Binance CEO CZ recently shared two important lessons for crypto companies to remember to protect themselves from the crisis.
Binance takes over as the leading exchange in the space by purchasing FTX, the cryptocurrency exchange with the second-highest trading volume. Since the market cap of all cryptocurrencies fell by almost 7% in the last day, speculation over what will happen next is at an all-time high.
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