The crypto exchange wars were short-lived; Binance and its CEO Changpeng “CZ” Zhao emerged victorious after a couple of days of uncertainty, carnage, and unexpected announcements. Via his Twitter account, CZ announced that it entered a deal to acquire its competitor FTX.

As mentioned, the two platforms engaged in a battle for dominance after CZ accused FTX and its founder, Sam Bankman-Fried, of lobbying against “other industry players behind their backs.” The Bankman-Fried platform faced a bank run and succumbed to pressure amid a lack of liquidity.

In this context, the executive reached out to Binance and CZ to protect its users by surrendering FTX to Binance for an undisclosed amount. The partners are still working out the details; CZ claims that Binance can exit the deal at “any moment.”

The Binance said that the company entered a non-binding letter of intent (LOI). The parties will publish details about the acquisition in the coming days. Still, there is already much speculation about it, its potential implications for the crypto market, and potential legal consequences for FTX.

Yup, 100% acquisition.
Given how little time it took to close this deal. It’s likely Binance acquire FTX for nominal/negligible amount and assume all the liabilities of FTX. https://t.co/x3meaQe34l
— Arthur (@Arthur_0x) November 8, 2022

Binance Takes The Crown

As reported by our sister website NewsBTC earlier this week, FTX stablecoin reserve dropped by over $500 million as part of the bank run against the platform. Over the same period, Binance saw a positive 411 million in inflows.

FTT’s price crashing on the daily chart. Source: FTTUSDT Tradingview

This data suggest users were taking their money out of one exchange and depositing to Binance amid the growing reports of insolvency. The Bankman-Fried led exchange platform allegedly had billions of dollars on its balance sheet as FTT, a token classified as “illiquid” by many.

Binance took the opportunity to pressure FTX and announced the liquidation of their funds in FTT. As a result, FTX suffered a liquidity crunch that resulted in halting new withdrawal requests from users, as Bitcoinist reported this morning.

When a platform halts withdrawals in crypto, it usually leads to a major negative announcement. A couple of hours after this news broke out, Bankman-Fried announced the acquisition from Binance for the FTX.com platform. The acquisition deal will not impact FTX.US. The FTX CEO said:

Things have come full circle, and http://FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for http://FTX.com (pending DD etc). (…) 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. A *huge* thank you to CZ, Binance, and all of our supporters.

On the other hand, CZ replied:

This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.

The exchanges must complete the deal, but today will be remembered as one of the most historic days in the crypto industry, regardless of the result.