Binance has agreed to buy rival cryptocurrency exchange FTX after a surge in customer withdrawals triggered a liquidity crisis at Sam Bankman-Fried’s company.
Binance CEO Changpeng “CZ” Zhao wrote on Twitter that FTX had “asked for our help”, adding: “There is a significant liquidity crisis.” Binance has signed a letter of intent to buy FTX, but said it had “the discretion to withdraw from the agreement at any time”.
FTX hit a $32 billion valuation earlier this year, with blue-chip investors including BlackRock, Canada̵[ads1]7;s Ontario Teachers’ Pension Plan and SoftBank backing the company.
The deal with Binance ends an explosive and highly public row between Bankman-Fried and Zhao – two of the most powerful figures in the crypto industry – and will combine two of the world’s largest crypto exchanges.
FTX’s troubles accelerated over the weekend when Binance said it intended to offload its holdings of FTX’s token FTT, citing concerns over the exchange’s financial stability and sending the token plummeting in price.
Bankman-Fried responded on Monday, saying a “competitor is trying to go after us with false rumours”. He added that he would “love it” if he could work with Zhao “together for the ecosystem”.
The FTX boss also tried to calm the markets by saying: “FTX is fine. Assets are fine.”
But on Tuesday, he tweeted: “CZ has done, and will continue to do, an incredible job building the global crypto ecosystem and creating a freer financial world.” FTX confirmed the deal; the two companies did not immediately disclose the terms.
If completed, the deal will leave Binance as the largest platform in crypto trading.
“This elevates Zhao as the most powerful player in crypto,” said Ilan Solot, co-head of digital assets at Marex Solutions. “Zhao’s view of the world will matter much more in terms of how he wants to interact with regulators and policy makers. . . the weight of his views will be much stronger.”
The crypto industry has struggled over the past year, especially since the terra and luna token debacle in May. The price of flagship tokens bitcoin and ether plunged and several major companies collapsed, including lender Celsius Network and hedge fund Three Arrows Capital.
The bailout deal is also a major setback for Bankman-Fried, who has long been seen as a relatively stable and ambitious figure in the often wobbly crypto world.
In the wake of this year’s crypto market collapse, he gained a reputation as an industry savior after helping failing companies. In June, the FTX boss announced a $250 million loan to ailing crypto lender BlockFi.
The loan followed further assistance for crypto broker Voyager Digital, which was bailed out by an FTX loan worth around $485 million in cash and bitcoin.
But Bankman-Fried’s ambitions also extended to traditional markets: his exchange sought to shake up the trading of Wall Street futures and stock markets by buying a stake in Robinhood, the retail brokerage.
In 2021, FTX signed a 19-year deal to rename the Miami Heat Arena to FTX Arena. In 2021, Bankman-Fried said that buying Goldman Sachs was “not out of the question at all”.