The acquisition of the second-largest retail exchange in the cryptocurrency market by rival Binance will just add to the year’s amount of chaotic events that have occurred in the market.
The two major cryptocurrency exchanges signed a non-binding letter of intent, and Binance CEO Changpeng “CZ” Zhao stated on Twitter that his company had agreed to purchase FTX amid a panic that raised fears that FTX’s cryptocurrency exchange would not survive.
CZ disclosed that both companies will complete a full Direct Debit in the upcoming days while Binance assesses the situation in real time. He continued by saying that Binance has the right to withdraw from the agreement at any time and that FTT, FTX exchange token will probably experience significant volatility as events play out over the next few days.
Sam Bankman-Fried, the CEO of FTX, also tweeted to confirm the agreement on the strategic deal with Binance. He said that one of the key reasons FTX wanted Binance to intervene was to address the withdrawal backlog and alleviate liquidity issues.
The transaction follows a CoinDesk story last week that raised questions about Alameda Research, FTX’s corporate sibling, and it’s over-reliance on illiquid coins like its own FTT.
The story sparked rumors of FTX’s potential implosion for the past 48 hours, and some individuals were worried that the company would suffer the same fate as Celsius and Voyager—two infamously large cryptocurrency companies that collapsed predictably in the spring and appeared to raid customer funds in an effort to stay afloat.
In response to news, the price of FTX’s FTT token increased more than 40% to a peak of $21.20 from daily low of $14.32, though it has since somewhat declined. The price of Binance’s BNB coin increased by 27% from its daily low of $312 to $398.