Changpeng Zhao says a non-binding letter of intent was signed on Tuesday, and full due diligence will be performed in the coming days.
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Binance has announced that it is planning to acquire FTX after the rival exchange suffered a "significant liquidity crunch."
Changpeng Zhao says a non-binding letter of intent was signed on Tuesday, and full due diligence will be performed in the coming days.
In a follow-up tweet, Binance's CEO warned that much uncertainty remains, writing:
"There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time. We expect FTT to be highly volatile in the coming days as things develop."
FTT has been volatile indeed — falling by 72.8% over the past 24 hours. Such a sharp, sudden downturn hasn't been seen since the collapse of LUNA and UST back in May.
In an update of his own, Sam Bankman-Fried said FTX "had come full circle" — a nod to the fact that Binance was an early investor in his exchange.
He stressed that teams at both exchanges are working on clearing out the withdrawal backlog at FTX — and all assets will be covered on a one-to-one basis.
"This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that. But the important thing is that customers are protected."
SBF went on to say thank you to CZ and Binance — and described the acquisition as "a user-centric development that benefits the entire industry."
"CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world."
And while he acknowledged that there had been media reports of conflict between the two businesses, SBF added:
"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."
It's important to stress that the proposed acquisition wouldn't involve the American arms of either exchange — FTX.us and Binance.us.
What's Happened?
This is a staggering reversal of fortunes for FTX, which until recently was one of the biggest crypto exchanges in the world.
Sam Bankman-Fried had sought to position himself as the industry's savior during a punishing bear market — swooping in to buy assets of stricken firms such as Voyager Digital.
But now, just a couple of months on, FTX itself is the company in need of a bailout.
Just a few short days ago, SBF had insisted that his exchange was fine — despite the fact that his crypto empire had been rocked by a series of allegations.
The saga began when a CoinDesk article delved into the finances of Alameda Research, FTX's sister company.
An investigation of Alameda's balance sheet revealed that it mainly consisted of FTT, a token issued by FTX that delivers discounts on trading fees.
CoinDesk suggested that this shows Alameda "rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto."
Binance's CZ then said over the weekend that his exchange would be liquidating the FTT tokens it received after exiting its investment in FTX last year.
Binance is the parent company of CoinMarketCap.
