Binance, the largest crypto exchange by trading volume, said it would buy FTX as its smaller rival struggles amid speculation over its finances. The two giant crypto exchanges have signed a non-binding letter of intent.
- Amid the insolvency rumors surrounding FTX, Binance has announced buying FTX.
- Binance announced earlier this week that it was selling all of its FTT tokens, which are FTX's native tokens.
- There is a liquidity crisis at Sam Bankman-Fried's crypto exchange FTX.
Megadeal of Crypto Exchanges
At the moment, the cost of the acquisition is unclear. Currently, Binance has 30 million users and a $37 billion daily trading volume, while FTX has 5 million users and a $4.24 billion daily trading volume. Binance.US and FTX US, which are separate companies, will not be affected by the deal.
Binance CEO Changpeng "CZ" Zhao wrote on Twitter on November 8: ''This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.''
"Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.)," FTX's Sam Bankman-Fried tweeted.
The due diligence process will begin within the next few days. The deal comes just a day after Binance decided to sell its entire FTT tokens (the native tokens of FTX) following rumors surrounding the insolvency of FTX.
Market Jumps Hearing The News
Following the insolvency news yesterday, the market saw massive sell-offs, with FTT tokens falling over 30% on the week. There were also losses of double digits in other major cryptocurrencies, such as Dogecoin and Solana. However, after hearing about the Binance-FTX deal, the crypto market recovered a bit, with FTT rising 25% over the last hour, and Binance's BNB token rising 8%, according to CoinGecko.
The Bottom Line
Crypto market players were concerned the ongoing FTX drama may lead to a Terra-like crypto collapse. Experts even said that a Terra-like collapse would be detrimental to everyone, including Binance. With the latest deal, Binance has become stronger, but it has also eased the crypto market for now.