FTX-Binance: Are They Now Acquiring Rival Exchange FTX?

The last 48 hours spelt trouble for the industry, with the two exchanges and their respective CEO’s clashing, with an “exchange war” ensuing.

You can read more on that here. 

Binance, being the world’s largest cryptocurrency exchange now, was actually the first investor that backed FTX, however as time passed and competition ramped up, the relationship faded.

Over the last few months, the two CEOs have been hurling some jabs at each other on social media, with the relationship hitting all time lows this week when CZ announced than Binance would be liquidating their extensive FTT position, the native token of FTX, after rumours circulated that FTX and Alameda’s balance sheets were looking dire. CZ labelled the exit as “post-exit risk management”.

 

How Liquidity Concerns Sparked the FTX-Binance Deal

The decision to acquire FTX has been stated “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,” he said in a tweet below:

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 https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.

— CZ 🔶 BNB (@cz_binance) November 8, 2022

SBF did give a “huge thanks” to CZ and Binance,, adding that the deal was “a user-centric development that benefits the entire industry.”

“CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world,” Bankman-Fried said in a tweet below:

1) Hey all: I have a few announcements to make.

Things have come full circle, and https://t.co/DWPOotRHcX’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for https://t.co/DWPOotRHcX (pending DD etc.).

— SBF (@SBF_FTX) November 8, 2022

Despite it being resolved for now, the announcement has shocked both the business world and the cryptocurrency space. Bitcoin was trading at $20.6k/USD overnight and put in a new low of $16.8k/USD this morning, sending the rest of the market downwards just as things were seeming to be somewhat safe. 

2022 has been accustomed to some hurtful developments this year, but this almost takes the cake. SBF was seen as a “crypto saviour” throughout much of this year. FTX was valued at $32 billion in its most recent funding round (a Series C) in January this year. The firm counts Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, Bond and Iconiq Growth among its long list of backers. FTX and its FTX US business raised over $2.2 billion across several funding rounds, according to Web3 Signals, a cryptocurrency dealbook.

FTX Ventures is also a major investor in a large number of cryptocurrency startups including Aptos Labs, Messari, Sky Mavis, LayerZero, YugaLabs and 1inch Network. 

As Sam stated, “I know that there have been rumours in the media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralised global economy while working to improve industry relations with regulators. We are in the best of hands.”