[Asia Economy Reporter Jeong Hyunjin] Binance, the world's largest cryptocurrency exchange, announced on the 8th (local time) that it will pursue the acquisition of its competitor FTX, which is facing a liquidity crisis. Sam Bankman-Fried, CEO of FTX, who was hailed as the 'savior of the cryptocurrency industry,' ultimately bowed out after a sudden 'bank run' occurred due to rumors of financial instability in FTX's affiliated companies.
Binance CEO Zhao Changpeng posted on Twitter that he signed a letter of intent (LOI) to acquire FTX and will proceed with due diligence. Binance stated that this deal was made in response to FTX's request for help amid its liquidity crisis.
FTX CEO Bankman-Fried also confirmed via Twitter that they agreed to a strategic deal with Binance. He emphasized, "Our team is working to resolve the withdrawal balance issue, which will solve the liquidity crisis. All assets will be handled on a one-to-one basis," adding, "This is one of the reasons we asked Binance to participate."
Neither CEO disclosed specific acquisition terms.
According to Bloomberg and other sources, FTX has been struggling with a liquidity crisis following a coin withdrawal incident triggered by rumors of financial instability in its affiliated companies. Last week, CoinDesk, a specialized media outlet in the crypto industry, obtained internal documents from Alameda Research, FTX's sister company, reporting that "a significant portion of Alameda's balance sheet is filled with FTT, a token issued by FTX that offers fee discounts to exchange users." This structure, where affiliated companies hold FTT issued by FTX, implies that if the price of FTT falls, both companies could simultaneously face financial difficulties.
CEO Bankman-Fried denied the rumors, stating, "Competitors are spreading false rumors." However, decisively on the 6th, CEO Zhao Changpeng announced that, as part of risk management learned from the Terra-Luna incident, he would sell all of Binance's holdings of FTT worth approximately $2.1 billion (about 2.9 trillion KRW). Following this, panicked investors rushed to withdraw funds, and FTX eventually took measures to block withdrawals on its platform that morning.
Bitcoin prices fell sharply below the $20,000 mark that day but slightly rebounded after news of Binance's acquisition of FTX. According to cryptocurrency information site CoinMarketCap, as of 5:30 a.m. Korean time, Bitcoin was trading around the $18,000 level.
CEO Zhao emphasized that this acquisition effort is a measure to protect investors. However, he noted, "This is a non-binding letter of intent," adding, "We are assessing the situation in real-time in a very dynamic environment. Binance reserves the right to withdraw from the deal at any time."
Until early this year, FTX was valued at $32 billion and had secured investors such as BlackRock, the Ontario Teachers' Pension Plan (OTPP) of Canada, and SoftBank. It was regarded as a well-operated cryptocurrency exchange centered around CEO Bankman-Fried, who maintained close ties with the U.S. political sphere.
Bankman-Fried, who has operated FTX since 2019, was estimated to have assets worth $24 billion as recently as six months ago. In May, he was considered a savior in the industry for injecting funds into the cryptocurrency sector, which was thrown into turmoil by the Terra-Luna incident.
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