The plans to take over the FTX Derivatives Exchange platform were disclosed on Twitter by Changpeng ‘CZ’ Zhao, the CEO of Binance, on Tuesday.
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 https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ 🔶 Binance (@cz_binance) November 8, 2022
The takeover agreement was reached as a result of FTX’s current liquidity problems. However, some prominent investors like SoftBank, BlackRock, and the Ontario Teachers Pension plan are not yet aware of the buyout deal. Other investors include Sequoia, Paradigm, Tiger Global, SoftBank, Circle, Ribbit Capital, Alan Howard, Multicoin Capital, VanEck, and Temasek.
Sam Bankman-Fried, the Founder and CEO of FTX apologizes to its investors over the lack of communication as regards the recent takeover of FTX by Binance exchange. He also added that he wishes he has more information concerning the situation of things but believes Ramnik Arora, FTX’s head of product, would be happy to answer any queries.
Changpeng also stated that there is a lot to discuss concerning the deal, therefore enough time is required.
“The deal is very dynamic and we are monitoring it as it develops. At any time, Binance is free to renege on the agreement. As events unfold, we anticipate that FTT will be very volatile,” he said.
The Deal Between FTX and Binance
Sam Bankman-Fried, CEO of FTX, had been purchasing struggling cryptocurrency businesses up until recently due to a credit shortage brought on by the abrupt collapse of the cryptocurrencies LUNA and TerraUSD (UST).
FTX had started facing customers’ withdrawals after Binance CEO Changpeng Zhao announced that the exchange would start selling off its holdings of FTT, the exchange’s token. Before the ongoing feud between Binance and FTX, Alameda Research, the trading firm run by FTX CEO Bankman-Fried, had proposed to pay $22 for all of Binance’s FTT tokens after Changpeng pledged to sell his FTT bag for about $600 million.
For the past few months, CZ and Bankman-Fried have been engaged in a heated Twitter debate about anything from charges of front-running trades to lobbying US legislators. Despite CZ’s claims that selling FTT tokens was a “move against a competitor,” his later tweets suggested that he had been dissatisfied with FTX.
Recent data from CoinGecko showed a decline in crypto asset holdings in the crypto industry since the news of the FTX takeover was released. Ethereum has seen a slump of 15%, while Bitcoin has fallen 11.6%. The FTX native token FTT also slumped by 71.6% to $4.60 at the time of writing.
