CZ: Binance Signs a Letter of Intent to Acquire FTX and ‘Help Cover the Liquidity Crunch’

On Tuesday (8 November 2022), Binance CEO Changpeng Zhao (aka “CZ”) and Samuel Bankman-Fried (aka “SBF”) shook the crypto market with a pair of stunning announcements.

First, SBF announced that FTX and Binance had “come to an agreement on a strategic transaction with Binance” for FTX:

SBF went on to say:

“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… But the important thing is that customers are protected…

“A *huge* thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world…

“I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.

He also pointed out that FTX US and Binance US are “two separate companies” and are not “currently impacted by this”; furthermore, he mentioned that FTX US’s withdrawals “are and have been live, is fully backed 1:1, and operating normally.”

A few minutes later, CZ took to Twitter to announce that FTX had asked Binance to help it with “a significant liquidity crunch”, and that Binance had decided to protect FTX’s customers by signing a non-binding letter of intent (LOI) to fully acquire FTX:

CZ went on to add:

“There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.“

This news has crypto investors celebrating, with Bitcoin and other cryptocurrencies reversing much of the losses made earlier in the day. Currently (as of 4:32 p.m. UTC on 8 November 2022), according to data by Cruptocompare.com, $BTC, $ETH, $BNB, and $FTT are trading around $20,559 (-0.5%), $1,567 (-0.64%), $384.51 (+14.69%), and $18.38 (-18.86%).

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