Binance buys FTX in major cryptocurrency exchange merger | Cryptocurrencies

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The two largest offshore cryptocurrency exchanges are merging after a week of public spat between Binance CEO Changpeng Zhao and FTX boss Sam Bankman-Fried sparked a bank run on the latter’s exchange and an embarrassing forced sale on Tuesday.

“This afternoon FTX asked for our help,” Zhao tweeted. “There is a significant liquidity gap. To protect users, we have signed a non-binding [letter of intent]that intends to fully acquire FTX.com.”

The news was confirmed in a tweet by Bankman-Fried. He said: “Things have come full circle and FTX.com’s first and last investors 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 cash crunch on the exposed exchange. Additional terms were not disclosed by either party.

Both Binance.US and FTX.US, the two companies’ associated US regulated exchanges, remain independent.

Bankman-Fried is a major donor to the US Democratic Party, and FTX was a top-20 contributor to Joe Biden’s presidential campaign, gives over 5 millionBankman-Fried is said to have donated about $40 million this year leading up to today’s midterm elections.

The two top executives are among the most prominent players in the industry, known by their initials – CZ and SBF – and each capable of moving markets with just a tweet. They have previously worked together, with Binance investing in FTX at the exchange’s inception.

But on Sunday, CZ posted a brief thread explaining that “due to recent revelations that have come to light,” the company would sell about $2 billion. The FTT crypto tokens that FTX had created years before and issued to investors.

Although CZ did not specify the reason, his post came days after a pseudonymous crypto researcher, Dirty Bubble Media, had accused another of SBF’s companies, Alameda Research, of insolvency: Alameda had a significant portion of its own assets in FTT. “It’s almost as if SBF found a way to hack the financial system by printing billions of dollars out of thin air against which he was able to borrow massive amounts from unknown counterparties,” he says. said the post,

Binance’s decision to sell tokens received an immediate response, with users of FTX rushing to withdraw their funds from the exchange. On Monday, SBF hit back at CZ, secondment: “A competitor is trying to go after us with false rumours. FTX is fine. Assets are fine. FTX has enough to cover all customer inventories… I would love it, [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 was a question about a large ($580M) FTT deposit to Binance, and we were transparent about the fact that we are closing our FTT position.”

Meanwhile, withdrawals continued until FTX stopped processing customer requests to withdraw their money on Tuesday morning. Blockchain records show a four-hour gap during which only a certain type of cryptoasset, called an ERC-20 token, was recorded leaving the exchange’s digital wallet. At 4 p.m. SBF conceded defeat.

“Our team is working to clear out the withdrawal backlog as it is,” he wrote after announcing the sale of FTX. “This will remove liquidity issues; all assets will be covered 1:1. This is one of the main reasons why we have asked Binance to come in. It may take some time to settle etc. – we regret that. But the important is that customers are protected.

“A *big* 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 about conflict between our two exchanges, but Binance has once again and demonstrated again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in good hands.”



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