Binance, the world’s largest cryptocurrency exchange, reached an agreement to acquire its competitor FTX.
This week, Bankman-Fried’s exchange experienced a major liquidity crisis after Binance decided to liquidate the exchange’s token, FTT.
For this reason, Binance may be forced its hand on devaluing FTX’s price, ahead of the acquisition. The transaction is the largest consolidation initiative ever seen in the digital asset category.
The terms of the agreement were not disclosed yet, however, FTX’s CEO, Sam Bankman-Fried shared some details about the purchase.
According to Sam Bankman-Fried, CEO of FTX, the transaction has no impact on Binance and FTX operations in the United States.
The two companies have a significant market presence and may face competition-related restrictions.
Binance announced a proposal unrelated to FTX arrived, implying that the parties may withdraw from the transaction without prejudice.
FTX must go through a “due diligence” procedure to evaluate its assets before continuing with the deal.
Binance Acquiring The 7th Largest Exchange in The World
Up until recently, FTX served as a market consolidator, assisting businesses in the sector facing financial difficulties.
The issue began on Sunday, when Binance CEO Changpeng Zhao, declared on Twitter that he would sell native tokens from the rival FTX.
The CEO reasoned the company’s liquidations due to a mysterious message about “recent findings”, but not stating what those revelations were.
Aside from causing the value of FTX tokens to plummet, the case led to other investors losing faith in FTX’s financial stability – requesting the return of other digital assets held in the exchange.
According to CryptoQuant, which studies volume in blockchains, FTX received withdraws in the order of US$471.3 million.
The purchase of FTX was announced on Twitter by Binance CEO Changpeng Zhao. The terms of the agreement were not disclosed.
“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 FTX and help cover the liquidity crunch.” CZ wrote on a Twitter post. “We will be conducting a full DD in the coming days.”