Binance is acquiring FTX.com following the collapse of its native exchange token FTT.
FTX founder Sam Bankman-Fried, who'd been silent as questions swirled about the fate of the exchange, announced the deal in a Twitter thread.
"Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. -- we apologize for that," Bankman-Fried said.
Binance CEO Changpeng Zhao, whose weekend announcement that his exchange would sell its FTT tokens set the chaos around FTX in motion, confirmed the purchase in another Twitter thread.
"This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch."
FTX had been looking to raise outside capital from venture investors prior to agreeing to the deal with Binance. The firm was seeking to raise funds at a valuation of $10 billion to $20 billion, according to sources familiar with the firm's plans.
FTX is one of the largest derivatives exchanges in the crypto market and an active investor in companies throughout the industry. FTX and Alameda provided companies in the market with $750 million in credit lines, as Fortune reported.
The firm's fortunes took a turn Sunday after rival Binance announced it would sell a large position in FTT, which Binance acquired when it sold its stake in FTX last year. That spooked traders, worried about the impact a declining price on FTT could have on FTX and its affiliated firm Alameda. Alameda—a quantitative trading firm owned by Bankman-Fried—reportedly holds $3.66 billion in "unlocked FTT," according to leaked balance sheet numbers reported by CoinDesk.
Alameda Research CEO Caroline Ellison said Sunday that the leaked information about the firm's balance sheet only reveals a portion of the total balance. On Monday, Bankman-Fried attempted to ameliorate concerns about potential knock-one effects of FTT's decline, noting that "FTX has enough to cover all clients holdings."
The price of FTT dropped precipitously from around $22 Sunday to $14.59 as of 10:45am EST. It's since rebounded to just under $20 after the news of the deal.
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