The two largest offshore cryptocurrency exchanges are merging, after a week of public squabbling between Binance’s chief executive, Changpeng Zhao, and FTX’s boss, Sam Bankman-Fried, triggered a bank run at the latter’s exchange and an embarrassing forced sale on Tuesday.
“This afternoon, FTX asked for our help,” tweeted Zhao. “There is a significant liquidity crunch. To protect users, we signed a non-binding [letter of intent], intending to fully acquire FTX.com.”
The news was confirmed in a tweet by Bankman-Fried. He said: “Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc).”
The deal will see FTX being “fully acquired” by Binance, in return for covering the cash crunch at the embattled exchange. Further terms were not disclosed by either party.
Both Binance.US and FTX.US, the associated American regulated exchanges of the two companies, will remain independent.
Bankman-Fried is a major donor to the US Democratic party, and FTX was a top-20 contributor to Joe Biden’s presidential campaign, giving over $5m. Bankman-Fried is reported to have donated about $40m this year in the run-up to today’s midterm elections.
The two chief executives are among the most prominent players in the industry, known by their initials – CZ and SBF – and each capable of moving markets with just a tweet. They have worked together in the past, with Binance investing in FTX at the exchange’s inception.
But on Sunday, CZ posted a short thread explaining that, “due to recent revelations that have come to light”, the company would be selling roughly $2bn-worth of FTT crypto tokens that FTX had created years before and issued to investors.
Although CZ did not specify the allegations, his post came just days after a pseudonymous crypto researcher, Dirty Bubble Media, had accused another of SBF’s companies, Alameda Research, of…
