Binance plans to buy rival FTX in bailout as crypto market crumbles
- The deal came as speculation about FTX’s financial health snowballed into US$6 billion of withdrawals in the 72 hours before Tuesday morning
- US antitrust enforcers could insist on probing the merger, antitrust experts said
Crypto giant Binance signed a nonbinding agreement on Tuesday to buy FTX’s non-US unit to help cover a “liquidity crunch” at the rival exchange, in a stunning bailout that raised fresh concerns among investors about cryptocurrencies.
The deal between high-profile rivals Sam Bankman-Fried, FTX’s CEO, and Binance CEO Zhao Changpeng came as speculation about FTX’s financial health snowballed into US$6 billion of withdrawals in the 72 hours before Tuesday morning.
The pressure on FTX came in part from Zhao, who had tweeted on Sunday that Binance would liquidate its holdings of the rival’s token due to unspecified “recent revelations”.
“It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns and Binance, their biggest rival, is coming to their rescue,” said Dan Raju, CEO of Tradier, a financial services provider and brokerage.
The move, a dramatic reversal in fortunes of billionaire Bankman-Fried, 30, is the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to US$1.07 trillion.