Binance signs non-binding contract to acquire FTX Crypto Exchange
- Crypto exchange FTX has enlisted Binance to help protect its users.
- Binance has accepted and signed a non-binding letter of intent to acquire the exchange.
- Previously, the CEO of Binance said that he would liquidate his entire FTX token portfolio as part of a post-exit risk management strategy.
Crypto exchange FTX has sought help from the biggest crypto market player, Binance, following the exchange’s liquidity crunch.
Changpeng Zhao (CZ), the CEO of Binance, posted on Twitter that his team had signed a non-binding letter of intent to acquire FTX to protect users from significant financial loss. The newly signed agreement will help FTX stand firm against its current liquidity crunch and be able to honor user withdrawal requests.
This afternoon, FTX asked for our help. There is a major liquidity crisis. To protect users, we have signed a non-binding letter of intent, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crisis. We will do a full DD in the next few days.
— CZ Binance (@cz_binance) November 8, 2022
Earlier today, the price of FTT, the native token of FTX, dropped significantly by more than 27% as investors rushed to sell the coin amid fears of FTX collapsing. (BNB), on the other hand, appreciated 12% after CEO Zhao announced his intention to acquire the FTX exchange.
Yesterday, CZ announced that his company would liquidate its entire FTT token portfolio as part of a post-exit risk management strategy. Binance’s CEO made the financial decision after a media investigative report revealed that FTX’s balance sheet mostly contains FTT tokens rather than independent assets like fiat currency or another cryptocurrency.
The liquidation of our FTT is only a post-exit risk management, learning from LUNA. We’ve been supportive before, but we won’t pretend to have sex after the divorce. We are against no one. But we won’t support people who lobby against other industry players behind their backs. From.
— CZ Binance (@cz_binance) November 6, 2022
Analysts claim that the major problem with the FTT token is that it has no use and hardly any demand. As a result, the coin may become an illiquid asset, endangering the financial security of investors similar to that of LUNA.
Additionally, after deciding to withdraw equity from FTX last year, Binance received approximately $2.1 billion in compensation in the form of a stablecoin and FTT rather than a stablecoin alone. . FTX CEO Sam Bankman-Fried would desperately need to keep FTT’s value inflated to continue attracting outside investors with increased values.
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