Just a few hours after it was reported that the exchange, FTX, had ceased processing withdrawals, its founder Sam Bankman-Fried made the shocking announcement that Binance intended to buy the non-American company FTX.com.
Sam Bankman-Fried, the founder of the exchange, revealed the deal in a post on Twitter after being silent as rumors regarding the exchange’s future circulated.
Bankman-Fried said,
“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.”
The controversy surrounding Bankman-Fried’s exchange was started by Binance CEO Changpeng Zhao’s weekend declaration that his exchange will sell its FTT tokens. Zhao, however, later verified the acquisition in another Twitter thread. He tweeted,
“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.”
The company’s fortunes changed on Sunday after competitor Binance revealed it would sell a sizeable share in FTT that it had acquired after selling its stake in Bankman-Fried’s firm last year. This alarmed traders who were concerned about the potential effects of a falling FTT price on FTX and its associated company Alameda. According to leaked balance sheet data cited by local media, Bankman-Fried-owned quantitative trading company Alameda apparently possesses $3.66 billion in “unlocked FTT.”
Caroline Ellison, CEO of Alameda Research, stated on Sunday that the company’s balance sheet information that was leaked only shows a percentage of the total balance. Bankman-Fried noted that “FTX has enough to cover all client holdings” on Monday in an effort to allay worries about the potential knock-on effects of FTT’s drop.
Genesis And Crypto.com Distance Themselves From FTX
Heavyweight cryptocurrency companies including Bitpanda, Circle, and Tether had previously cut ties to the controversy. As anticipated, the wallet service Crypto.com and the cryptocurrency trading and loan firm Genesis Trading are among the most recent businesses to remove themselves from the FTX liquidity problem.
The two businesses used Twitter to reassure clients of their modest exposure to the incidents that earlier today drove the cryptocurrency market into a frenzy.
Without specifically mentioning FTX, Genesis tweeted from its official business account.
Kris Marszalek, the CEO of Crypto.com, also spoke to the market through Twitter and stated that his company’s exposure to the scenario was minimal. More than 70 million people utilize the cryptocurrency exchange.
All of the company’s devices are “completely working,” according to BlockFi co-founder Flori Marquez, who also made it clear that the company is separate from FTX. Brian Armstrong, the CEO of Coinbase, added in a tweet that neither FTX nor its FTT token posed a serious risk to the cryptocurrency exchange.
The announcement of Bankman-Fried’s exchange acquisition occurred just two days after Changpeng Zhao, CEO of Binance, tweeted on 6 November 2022 that the business would be liquidating its holdings in FTT coin due to “recent developments.” In a since-deleted tweet on 7 November, Zhao claimed that FTX was “OK” after Bankman-Fried expressed concern over Zhao’s post regarding the health of his companies. A day later, before the announcement of the partnership with Binance, FTX suspended withdrawals.