BREAKING: Binance Says It’s Buying FTX

The Alpha:

On Tuesday morning, FTX CEO Sam Bankman-Fried Tweeted that his crypto exchange had reached a deal with Binance to protect customers amid a liquidity scare.The sentiment was echoed by Binance CEO Changpeng Zhao, who Tweeted that the company had signed a non-binding Letter of Intent to fully acquire in the near future.Zhao also noted that the situation is “highly dynamic” and that Binance has the discretion to pull out from the deal at any time.

On the morning of Tuesday, November 8, FTX CEO Sam Bankman-Fried and Binance CEO Changpeng Zhao confirmed that FTX will be acquired by Binance. Taking to Twitter, both executives noted that the move stems from an FTX liquidity crunch, which has resulted in a lack of cash or easily convertible to cash assets on hand for FTX to disseminate to its customers.

“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches and all assets will be covered 1:1,” Bankman-Fried stated via Twitter. “This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle and we apologize for that.” Bankman-Fried noted that and are two separate companies and are not currently impacted by this deal.

A liquidity crunch, also called a liquidity crisis, often occurs when various asset markets freeze up, making it significantly difficult for businesses to sell off their stocks and bonds. This current crunch being experienced by FTX is likely due to the recent waning of crypto and stock prices, which has created an increased demand for liquidity from FTX users, that cannot be met by the company’s current supplies. Liquidity crises often lead to mass defaults and even bankruptcies, meaning that this recently announced deal with Binance could truly be a lifesaver for FTX.

“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI (Letter of Intent), intending to fully acquire FTX and help cover the liquidity crunch,” Zhao stated via Twitter. “We will be conducting a full DD (due diligence) in the coming days.” Zhao went on to note that Binance has the discretion to pull out from the deal at any time.

This story is developing and will be updated.

The post BREAKING: Binance Says It’s Buying FTX appeared first on nft now.

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