The cryptocurrency exchange Binance stated it plans to buy its rival FTX Trading, in the newest instance of how fortunes can change quickly in the crypto world.
Binance CEO Changpeng Zhao stated on Twitter Tuesday that his firm had signed a letter of intent to buy FTX as a result of the smaller exchange was experiencing a “important liquidity crunch.” The deal was pending due diligence, Zhao stated on Twitter.
Samuel Bankman-Fried, founder and CEO of FTX, additionally took to Twitter to say the deal would defend the exchange’s prospects. It’s a shocking flip of occasions after Bankman-Fried was hailed as considerably of a saviour earlier this yr when he helped shore up various cryptocurrency firms that bumped into monetary hassle.
FTX is the newest cryptocurrency firm this yr to come underneath monetary stress as crypto property resembling bitcoin and ethereum have collapsed in worth. Failures embody Celsius, a bank-like firm that took in crypto deposits in exchange for yield, in addition to an Asia-based hedge fund often called Three Arrows Capital.
Coindesk, which specializes in information about digital property, reported final week that a lot of the steadiness sheet of Bankman-Fried’s buying and selling agency Alameda Research was tied up in FTX’s personal digital token referred to as FTT. Binance rattled the market over the weekend when it stated it deliberate to liquidate of its holdings in FTT on considerations that the corporate was illiquid.
On Tuesday morning, cryptocurrency buyers stated they have been having hassle withdrawing cash from FTX as properly. The worth of FTT plunged in a single day solely to stabilize after the deal was introduced.
Other main cryptocurrencies have been greater after the deal was introduced as properly, with Bitcoin rising 5 per cent.
The deal would make Binance, which is already the most important cryptocurrency exchange by each day quantity, an much more dominant participant in the cryptocurrency trade. FTX was the third largest exchange as of this week.
Bankman-Fried, higher recognized by his initials SBF, was hailed by the crypto trade earlier this yr after pledging to buy sure crypto property to bolster the steadiness sheets of different failing crypto firms. That included firms like Voyager Digital, which failed after proudly owning a stake in the failed steady coin Terra.
Bankman-Fried additionally bought a stake in the net buying and selling platform Robinhood after that firm’s shares plunged as income dropped and it misplaced cash.
Bankman-Fried stated neither the U.S. operations of Binance or FTX are concerned in the deal introduced Tuesday.