Binance’s CEO and FTX’s CEO have both stated their companies have signed a Letter of Intent (LoI) agreement for Binance to acquire FTX.
“This afternoon, FTX asked for our help,” Changpeng Zhao of Binance said before adding:
“There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop.”
While Sam Bankman-Fried of FTX stated:
“Things have come full circle, and FTX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX (pending DD etc.).
Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc.”
This astonishing turn of event comes amid mass withdrawals from FTX following suggestions Alameda, a quant trader related to FTX, has overleveraged now 3x FTT’s total market cap, that being FTX’s token.
Bitcoin rose on this news as did FTT, but it remains unclear at this stage what exactly do they mean by a liquidity crunch when they claim to have all assets 1:1 or why there have been delays to settle.