Binance signed a non-binding deal on Tuesday to buy FTX’s non-U.S. subsidiary to assist the rival exchange deal with a “liquidity crunch.” Although the tables have turned and FTX may be facing bankruptcy, things go from bad to worse.
- The agreement comes in the wake of a weeks-long social media spat between Binance CEO Changpeng Zhao and FTX founder Sam Bankman-Fried.
- Zhao said Binance chose a request for assistance from the three-year-old exchange FTX. He made this known in a tweet “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.”
- The two billionaires have been exchanging jabs for a while. The relationship between the two billionaires reached an all-time low earlier this week when Zhao announced that Binance was selling the FTT tokens. These FTT tokens were acquired as part of its withdrawal from the FTX exchange last year. Zhao confirmed that the company was selling off its FTT assets as “post-exit risk management.”
Binance’s FTX Acquisition, A Chess Move Says Crypto Community
- This development came with several reactions from the crypto community. A Twitter user commented, “Who needs Netflix when you are in crypto?” Some have equated the deal to a “chess move,” implying that Binance’s tactics purposefully resulted in the deal.
- Users on Twitter referred to the string of comments from Binance CEO Changpeng Zhao that led to the purchase and said that Zhao performed the most gangster move ever seen in Crypto.
See Related: FTT Tanks 71% After Binance Announced FTX Emergency Acquisition
Binance Then Backs Out of the Bailout Deal
- After making plans to acquire and assess its competitor’s financial health, Binance said it would forego the acquisition of FTX.
- Binance said on Twitter that the transaction was unfeasible owing to “corporate due diligence” findings and recently revealed government probes into the business alongside “mishandled customer funds“. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” said Binance.
- Binance decision to withdraw its offer to save the exchange from an estimated $8 billion funding shortfall may lead to the possibility of FTX facing bankruptcy.
See Related: Binance To Merge Stablecoin Competitors Into $BUSD
The Repercussions
- FTX has filed for Chapter 11 Bankruptcy, meaning the exchange will go through a restructuring – alongside this SBF has stepped down as the CEO of FTX.
- FTX was hacked and users’ funds were drained, although engineers were able to recover a large sum of the stolen money. Aswell as the FTX app being compromised by malware.
See Related: Why FTX Token Plungs Over 80% Wiping Out More Than $2 Billion Value In A Day?