Binance acquires FTX in response to liquidity crunch

Sam Bankman-Fried, the head of one of the largest cryptocurrency exchanges, said that they are currently facing the worst liquidity crunch, so rival Binance will sign a non-binding letter of intent to acquire the FTX business.

Binance CEO Changpeng Zhao also confirmed the news, with the following tweet about the possible acquisition:

“FTX turned to us for help this afternoon. There is a severe liquidity crunch. To protect users, we have signed a non-binding letter of intent to acquire http://FTX.com outright and help with the liquidity crunch.”

According to tweets from both parties, the acquisition only affects non-US business FTX.com. The U.S. branches of cryptocurrency giants Binance.US and FTX.us will remain separate from exchanges.

Commenting on Binance’s acquisition of FTX, NEAR Foundation CEO Marieke Fament said:

“In the current bear market in cryptocurrencies, consolidation is inevitable — but the silver lining is that we can now combine hype and noise with applications that have real-world utility and those that make significant and valuable contributions to the future of our industry. Leaders differentiate. There’s nowhere to hide in crypto winter – developments such as Binance’s acquisition of FTX underscore the challenges and lack of transparency behind the scenes for some key players – which have damaged crypto’s reputation. Going forward, the ecosystem will Learn from these mistakes and hopefully create a stronger industry with honesty, transparency and consumer protection at the heart of its business.”

In a tweet, Binance’s CEO added: “There is a lot to cover and it will take some time. This is a highly dynamic situation and we are assessing the situation in real-time. As the situation unfolds, we expect FTT in the coming days. Will be highly volatile.”

And with the announcement that Binance was liquidating its FTT tokens, sparked a massive withdrawal of FTX, with a staggering $451 million in outflows. Binance, on the other hand, had a net inflow of over $411 million over the same period. A liquidity crisis at a crypto giant like FTX has investors worried that a wider spread could bring down other major players in the market.