Binance buys FTX after public controversy and crypto stocks

Binance buys FTX after public controversy and crypto stocks

Binance gains rank as chief crypto unifier amid public tensions with rival FTX.

“This afternoon, FTX asked for our help. There is a significant liquidity crisis,” said Binance CEO CZ he tweeted on Tuesday. “To protect users, we have signed a non-binding [letter of intent], intending to fully acquire http://FTX.com and help cover the liquidity crisis. We will carry out full [due dilligence] in the next days.”

A liquidity crunch at FTX – which has been buying troubled crypto platforms in 2022 – suggests a potential sell-off of crypto to support financials.

“Things have come full circle and the first and last investors of http://FTX.com are the same: we reached an agreement on a strategic transaction with Binance for http://FTX.com (pending [due dilligence] etc.)” SBF Founder and CEO Sam Bankman-Fried (SBF) he tweeted.

Cryptocurrency exchange Binance founder and CEO Changpeng Zhao speaks at an event for Binance's fifth anniversary in Paris, France, July 8, 2022. To coincide with the FINTECH-CRYPTO/BINANCE-ZHAO Special Report REUTERS/Tom Wilson

Cryptocurrency exchange Binance founder and CEO Changpeng Zhao speaks at an event for Binance’s fifth anniversary in Paris, France, July 8, 2022. To coincide with the FINTECH-CRYPTO/BINANCE-ZHAO Special Report REUTERS/Tom Wilson

Shares of Coinbase and Robinhood, which both opened lower amid tensions between two of the largest cryptocurrency trading platforms, rose on the news. (SBF owns a 7.6% stake in Robinhood.)

Bitcoin also rose under pressure.

Shares of Riot, one of America’s largest Bitcoin miners, also jumped on the news.

The “strategic transaction” follows days of turmoil for FTX and its trading sister company, Alameda Research — founded and majority owned by Bankman-Fried — with the FTX token down 34% since November 1.

“This is a highly dynamic situation and we are evaluating the situation in real time. Binance has the discretion to withdraw from the deal at any time,” Zhao added. “We expect the FTT to be extremely volatile over the next few days as things unfold.”

“Our teams are working to eliminate withdrawal delays as they are. This will clear up liquidity issues. All assets will be covered 1:1. This is one of the main reasons we asked Binance to come. It can took a while to sort out etc — we apologize for that,” Bankman-Fried added via Twitter.

So far in 2022, total global cryptocurrency volumes on exchanges have fallen 21% to $86 trillion, according to crypto indexing platform Nomics.

During that period, Binance accounted for 21.7% of the total global cryptocurrency trading volume, while FTX held a 3.96% share. The total cryptocurrency market capitalization, meanwhile, has fallen 53% from $2.18 trillion to $1 trillion, according to Coinmarketcap.

A combination of Binance and FTX – the leading and third largest cryptocurrency trading platforms by volume, respectively – would create a behemoth in the cryptocurrency trading community.

Brian Sozzi is editor-in-chief and Anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and up LinkedIn.

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