The world’s largest cryptocurrency trading platform by volume, Binance has on Tuesday announced the acquisition of its formidable competitor, FTX, after a week-long public spat between Binance’s chief executive, Changpeng “CZ” Zhao, and FTX’s boss, Sam Bankman-Fried (SBF). 

Although the financial terms of the acquisition of FTX by Binance were not yet public at the time of this report, the deal undoubtedly unites two powerhouses in the crypto trading industry; as reports valued FTX at $32 billion at the start of the year, and Binance being the biggest crypto exchange by volume. 

The deal, whose value is not yet public, shocked crypto enthusiasts because FTX had for months been rescuing other struggling crypto companies. 

What they are saying 
FTX CEO Sam Bankman-Fried (SBF) tweeted on Tuesday that “things have come full circle, and’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for (pending DD etc.).”

Binance CEO Changpeng Zhao, popularly known as “CZ,” confirmed the news via Twitter saying “FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire and help cover the liquidity crunch. We will be conducting a full DD in the coming days.”

  • The letter of intent (LOI) implies Binance can pull out of the deal at any point.

Why the deal happened
On the 6th of Nov, CZ tweeted Binance had decided to liquidate its FTX tokens after a recent revelation came to light. Binance CEO added they will try to do so in a way that minimizes market impact because of market conditions and limited liquidity. 

Sam Bankman-Fried (SBF), FTX CEO, then took to Twitter to assure the crypto industry that the company’s assets were fine and a crypto company was simply spreading fake rumors about the exchange. He further added that FTX had enough funds to cover all clients holdings and that the company does not invest client’s assets. 

But being two strong industry movers, the series of tweets sparked a negative movement against FTX tokens, with many clients selling it off. At the time of this report, the token had broken below its support point (near $22.50) to $4.39, representing a 74.68 percent dip in the last 24 hours. As of Tuesday morning, reports showed that $6 billion of net had been withdrawn. 

The big picture 
Digital assets have been one of the worst hit industries after losing about $2 trillion over the last year, or two-thirds of its entire value. The news of Binance acquisition of FTX further encourages more crypto players to pull out of the industry. Bitcoin, the largest cryptocurrency, was trading down by 11.36 percent at the time of this report, while ethereum, the second-largest digital token, was trading down by 17.81 percent. 

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