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Digital Currency

Binance Throws a Life Preserver to Rival Exchange FTX

Rumors had swirled of late about FTX going bankrupt. It is likely to be saved now that Binance said Nov. 8 it intends to acquire FTX.

In a move that sent shockwaves throughout the crypto industry on Tuesday, crypto exchange Binance said it intends to buy FTX, likely rescuing its troubled competitor from a rumored bankruptcy.

The CEOs of both exchanges—Changpeng Zhao of Binance and Sam Bankman-Fried of FTX—took to Twitter to confirm the news on Tuesday.

In the thread on Twitter, Bankman-Fried went on to say:

2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. 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.

3) But the important thing is that customers are protected.

4) A *huge* thank you to CZ, Binance, and all of our supporters. This is 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.

5) 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.

Bankman-Fried also clarified that the deal does not impact FTX’s U.S. operations. He said, “’s withdrawals are and have been live, is fully backed 1:1, and operating normally.”

Yesterday’s news did not stop a volatile market from becoming less volatile. The entire market’s capitalization now stands at $900 billion, down from $3 trillion just one year ago, while major cryptocurrencies were down by double-digit percentages, the New York Times reportedForbes reported that Bitcoin is down over 10% over the past few days, Ethereum down as much as 15%, and FTX Token (FTT) crashed 43%.

And investors fear that Binance will not go through with the rescue plan, according to the NYT.

This morning Zhao shared on Twitter a communique he sent to staff about what has transpired in the past day or so:

So how did it come to this? The NYT explained:

Binance, an early investor in FTX turned rival, said over the weekend that it planned to sell its holdings in FTT, a token used for trading on FTX’s platform — a stunning move that cast doubt on the financial health of FTX and its trading arm, Alameda Research. The token’s value has plunged by roughly 80 percent in the past 36 hours to just under $5.

Traders withdrew over $1.2 billion from FTX on Monday alone, according to the research firm Nansen. By Tuesday, FTX had stopped processing withdrawals; its chief executive, Sam Bankman-Fried, who was reportedly casting about for a financial lifeline from billionaires, finally turned to Binance for salvation.


At the beginning of the year, FTX was valued at $32 billion, backed by heavyweight investors like BlackRock, SoftBank and Tiger Global. (Investors said yesterday they were blindsided by the deal.) The 30-year-old Bankman-Fried — known in the crypto world as S.B.F. — was said to have a net worth of over $16 billion. But a document leaked to CoinDesk purportedly showed that FTX and Alameda, whose finances had long been murky, were highly illiquid and financially vulnerable.

The crypto world fears other shoes will drop. Investors worry that CZ may yet pull out of his rescue deal: He noted on Tuesday that the transaction was nonbinding and subject to due diligence. Meanwhile, tokens associated with FTX, including Solana, have continued to plunge in value.

The NYT also noted that regulators believe the news justifies more scrutiny of crypto companies. “This is a major market event for the digital asset sector,” said Joe Rotunda of the Texas State Securities Board Enforcement Division, which had already been investigating FTX.