Binance, the world’s largest crypto exchange by volume, has signed a letter of intent to buy competitor FTX, the third-largest exchange by volume. The acquisition came after a CoinDesk article prompted speculation about FTX’s balance sheet. The terms of the deal weren’t disclosed.
The letter of intent is nonbinding, and Binance CEO Changpeng “CZ” Zhao said the firm will conduct due diligence before the acquisition. Binance’s acquisition came after CZ said on Sunday he’d sell FTX’s FTT token, leading to a plunge in the token’s value. That token was the biggest asset on the balance sheet of Alameda Research, the trading firm also founded by Sam Bankman-Fried, the CEO of FTX, according to CoinDesk’s story.
Bankman-Fried said yesterday that CZ’s Binance was attempting to target FTX “with false rumors.” Today, Bankman-Fried said that “rumors in media of conflict between our two exchanges” were exaggerated and that the Binance acquisition will help clear out a backlog of customer withdrawals.
Earlier this year, Bankman-Fried rescued BlockFi and Voyager Digital, two troubled crypto lenders that were under threat of bank runs. He’s also cozied up to US lawmakers, donating more than $39 million in this election cycle — still less than he’d promised, which was $1 billion before 2024.
By contrast, CZ’s Binance has been targeted by regulators in dozens of countries, including the US. The Securities and Exchange Commission and the Department of Justice in the US are both probing Binance, according to The Wall Street Journal.
The deal between the two companies isn’t totally done. “This is a highly dynamic situation, and we are assessing the situation in real time,” CZ said on Twitter.
People pulled $1.4 billion from FTX on the Ethereum blockchain over the last day, according to The Wall Street Journal.