FTX "called for help" due to a liquidity crisis, according to Changpeng Zhao, co-founder and CEO of Binance, and the exchange signed a letter of intent to purchase the non-US assets of FTX. Sam Bankman-Fried, the CEO of FTX, and CZ, the CEO of Binance, struck an agreement despite their high-profile rivalry since withdrawals totaling $6 billion (approximately Rs. 48,921 crore) from FTX in the 72 hours prior to Tuesday night were the result of FTX's financial woes. The bailout of one of the biggest and most recognizable businesses in the international bitcoin market by its main rival sent shockwaves through the market.
The agreement with Binance puts an acrimonious and highly visible argument between Bankman-Fried and Zhao to rest and unites the two largest cryptocurrency exchanges in the world.
When Binance announced it will sell its holdings of FTX's token, FTT, citing concerns about the exchange's financial health and sending the token's price down, FTX's problems accelerated over the weekend.
On Monday, Bankman-Fried retaliated, claiming that "a competitor is trying to go after us with false rumors." He continued by saying he would "love it" if he and Zhao could collaborate on an ecology project. The head of FTX also made an effort to soothe the markets by stating, "FTX is fine. The assets are good.
However, he stated in a tweet on Tuesday that "CZ has done, and will continue to do, a great job of expanding out the global crypto ecosystem, and creating a freer economic world." Additionally, Bankman-Fried pledged to "cover one for one" any assets owned by clients. The two businesses did not immediately disclose the specifics of the agreement, but FTX acknowledged it.
Bankman-Fried made an effort to reassure FTX investors in a note to investors late on Tuesday (via Reuters), noting that "protecting shareholders is our first concern," but adding that specifics of the acquisition were "still being worked out." If successful, the transaction will strengthen Binance's status as the biggest cryptocurrency trading platform.
Since the demise of the terra and luna coins in May, the crypto industry has had a difficult year. A number of significant businesses have failed, including lender Celsius Network and hedge fund Three Arrows Capital, and the prices of leading tokens like bitcoin and ether have plummeted.
The rescue agreement is also a significant setback for Bankman-Fried, who has long been regarded as a reasonably ambitious and solid figure in the frequently shaky world of cryptocurrency.
After the collapse of the cryptocurrency market this year, he became known as the industry's savior after assisting failed businesses. The CEO of FTX revealed a $250 million (approximately Rs. 2,038 crore) loan to struggling cryptocurrency lender BlockFi in June. Following additional support for cryptocurrency broker Voyager Digital, which was saved by an FTX loan of around $485 million (roughly Rs. 3,953 crore in cash and Bitcoin), the loan was made.
