Binance is ready to buy its competitor FTX

The largest consolidation operation ever seen in the world of cryptocurrencies.

Changpeng “CZ”Zhao, CEO of Binance, has signed a letter of intent to acquire FTX, a cryptocurrency exchange platform led by Sam Bankman-Freed, due to the risk of a severe liquidity crunch due to the FFT value plummeting. token. Since last spring, FTX has been considered one of the consolidating players in the market, and FTX is now in a difficult position due to the fact that its founder secretly owned a very large amount of FTT, the tokens of the FTX ecosystem, through his company Alameda Research. A CoinDesk survey then uncovered a hoax that angered the Binance boss to the point where he announced a sale within a few months of all of his FTT tokens worth the equivalent of the $529 million that Binance was holding as part of its FTX capital exit.

FTX is losing money soon, Binance will be its savior

Changpeng “CZ”Zhao’s reaction on social media resulted in a 30% drop in the price of FFT, which caused turmoil on the same FTX. Sam Bankman-Fried tried to reassure investors by hinting that FTX’s holdings are still positive, but the damage has already been done. He then froze withdrawals before announcing that he had reached an agreement on a strategic deal with Binance to acquire FTX.

The deal is a catastrophic failure for a company valued at $32 billion by private partners earlier this year with ambitions to become a cryptocurrency giant. A few months earlier, venture capital firm Sequoia Capital and BlackRock backed FTX with $25 billion. “These developments will not assuage the fears of cryptocurrency investors,” emphasizes Fawad Razaqzada, an analyst at City Index.

Binance Will Solve FTX Liquidity Crisis

For now, Binance’s operation only affects FTX.com’s business outside of the US. FTX.us will remain independent of Binance. However, according to a 2021 audit, FTX in the US only accounted for 5% of the platform’s total revenue. According to Changpeng “CZ”Zhao and Sam Bankman-Fried, it all depends on a non-binding letter of intent pending full due diligence.