FTX chief executive San Bankman-Fried tweeted on 8 November to address concerns over potential clashes with rival exchange platform Binance.
In his tweet, Bankman-Fried wrote that his company and Binance had reached an agreement on a “strategic transaction” after the latter firm nearly emptied its withdrawal backlogs. The FTX chief later urged Binance to “clear out liquidity crunches” and secure assets on an equal footing.
In a statement, Bankman-Fried said: “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.”
Responding, Zhao tweeted that FTX had contacted his company due to a “significant liquidity crunch,” adding the transaction was a non-binding letter of intent to acquire FTX.
According to Zhao, Binance had assessed the situation “in real time” and could “pull out from the deal at any time.”
CZ later tweeted “two big lessons,” which were to never use created tokens as collateral and not “borrow if you run a crypto business” and “have a large reserve.”
He concluded: “Binance has never used BNB for collateral, and we have never taken on debt”
FTX Struggles
The news comes just a day after Bankman-Fried slammed claims of liquidity concerns as “false rumours,” adding that FTX’s company assets were in good standing.
He wrote he had contacted the exchanges to collaborate “for the ecosystem.” Despite this, Binance stated it would remain “in the free market” rather than Alameda Research take over its FTT holdings.
Reports have noted that Binance’s acquisition of the exchange would become one of the largest in the industry, namely after Coinbase stated it was interested in buying out BtcTurk for roughly $3.2 billion USD.
If successful, Binance would become the world’s largest cryptocurrency exchange.
According to the Financial Times, the deal poses a huge setback for FTX, namely as people view the platform as stable and assisting other exchanges amid the cryptocurrency collapse this year. FTX has offered bailout loans to several companies, including $250m to BlockFi and $485m to Voyager Digital.
