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Binance acquires crypto exchange FTX to tackle ‘liquidity crunch’

 (Reuters)
(Reuters)

Binance is to acquire crypto exchange FTX in a bid to tackle its ‘liquidity crunch’, the firm has announced, just hours after the company’s founder said “FTX is fine” and hit back at reports of the firm’s instability as “false rumours.”

Binance founder Changpeng Zhao said in a tweet: “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 FTX.com and help cover the liquidity crunch.”

It comes just days after after billionaire Zhao said he would liquidate Binance’s holdings in FTT, a crypto token operated by FTX, because of “recent revelations.”

FTX founder and CEO Sam Bankman-Fried said in a tweet: “I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators.

“We are in the best of hands.”

As recently as yesterday, Bankman-Fried wrote: “A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine.”

The value of the FTT token subsequently fell as much as 40%.

The precise terms of the deal were not disclosed, though FTX was valued at as much as $40 billion (£35 billion) at the beginning of this year, according to Forbes, Bankman-Fried, was estimated to have a wealth of $16.6 billion.

Zhao said Binance would be able to pull out from the deal if it chose to do so. Bankman-Fried said the agreement had been made pending due diligence.

Binance is the world’s largest cryptocurrency exchange, with founder Chanpeng Zhao estimated to have a wealth of $17.4 billion.

The firm was put investigation by the US Department of Justice in 2021 over allegations of money laundering. Binance has been banned from regulated activity in the UK by the Financial Conduct Authority.