“This afternoon, FTX asked for our help,” Zhao tweeted. “There is a significant liquidity crisis. To protect users, we have signed a non-binding [letter of intent]intending to fully acquire FTX.com.” The news was confirmed by tweet from Bankman-Fried. He said: “Things have come full circle and the first and last investors of FTX.com are the same: we have reached an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.).” The deal will see FTX being “fully acquired” by Binance in exchange for covering the embattled exchange’s cash crunch. Further terms were not disclosed by either party. Both Binance.US and FTX.US, the two companies’ affiliated US regulated exchanges, will remain independent. Bankman-Fried is a major donor to the US Democratic Party, and FTX was one of the top 20 contributors to Joe Biden’s presidential campaign, giving more than $5 million. Bankman-Fried has reportedly donated about $40 million this year ahead of today’s midterm elections. The two CEOs are among the most prominent players in the industry, known by their initials – CZ and SBF – and each is capable of moving markets with a single tweet. They have partnered in the past, with Binance investing in FTX at the beginning of the exchange. But on Sunday, CZ posted a short thread explaining that, “due to recent revelations that have come to light,” the company would be selling about $2 billion in FTT crypto tokens that FTX had created years ago and issued to investors. Although CZ did not elaborate on the allegations, his post came days after a pseudonymous crypto researcher, Dirty Bubble Media, accused another SBF company, Alameda Research, of insolvency: Alameda held a significant portion of its own assets data to the FTT. “It’s almost as if SBF found a way to hack the financial system, printing billions of dollars out of thin air against which it was able to borrow huge sums from unknown counterparties,” the post said. Binance’s decision to sell the tokens sparked an immediate backlash, with FTX users rushing to withdraw their funds from the exchange. On Monday, SBF hit back at CZ, posting: “A competitor is trying to go after us with false rumors. FTX is fine. Assets are good. FTX has enough to cover all client participations… I would love to, [CZ]if we could work together for the ecosystem.” CZ feigned ignorance, saying he had written the thread “in 5 minutes… I didn’t know it would be ‘the straw that broke the camel’s back.’ My tweets were simple. There were questions about a large FTT deposit ($580m) on Binance and we were transparent about the fact that we are closing our FTT position.” Alex Hern’s weekly dive into how technology is shaping our lives Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. In the meantime, withdrawals continued, until on Tuesday morning, FTX stopped processing customer requests to withdraw their money. Blockchain records show a four-hour gap during which only a specific type of crypto asset, called an ERC-20 token, was recorded leaving the exchange’s digital funds. At 4pm, SBF conceded defeat. “Our teams are working to eliminate withdrawal delays as they stand,” he wrote, following the announcement of the FTX sale. “This will clear up the liquidity problems. all assets will be covered 1:1. This is one of the main reasons we asked Binance to come. But the important thing is that customers are protected. “A huge thank you to CZ, Binance and all our supporters. This is a user-centric development that benefits the entire industry… I know there have been rumors in the media of conflict between our two exchanges, however Binance has shown time and time again that it is committed to a more decentralized global economy while working to improve its relationships industry with regulatory authorities. We are in the best hands.”
