Editor’s Note: On Wednesday afternoon, Binance scrapped its plan to acquire FTX. In a statement published on Twitter, Binance said it will no longer pursue its proposed acquisition of FTX. FTX remains an independent company.
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On Tuesday, Binance, the largest crypto exchange by trade volume, announced it signed a non-binding letter of intent to acquire cryptocurrency exchange FTX, the parent company behind FTX US. News of the acquisition comes after a leak about FTX’s finances.
“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 FTX.com and help cover the liquidity crunch,” Changpeng Zhao, founder and CEO of Binance, wrote in a Twitter post on Tuesday.
Headquartered in the Bahamas, FTX is a crypto exchange platform where investors can buy and sell an array of digital currencies. Due to U.S. regulations on cryptocurrencies, U.S.-based investors are not able to use FTX’s platform, however, the company’s subsidiary FTX US can operate in the country.
In May, FTX US opened its headquarters in Chicago to house its 70 local employees. But FTX US is now set to relocate to South Florida, according to a September announcement.
According to FTX CEO Sam Bankman-Fried, FTX US would not be affected by Binance’s previously planned acquisition of FTX.
Binance was founded in 2017 and currently has no central headquarters. Similar to FTX’s marketplace, investors can buy and sell crypto on Binance’s platform, but U.S. investors must trade through its subsidiary Binance.US. According to CoinMarketCap, a website that tracks digital currency prices, Binance processes roughly $76 billion worth of digital trades in a day.
If the acquisition closed, the two companies would have created the largest digital currency exchange network in the world.
FTX is ranked as the fourth-largest crypto exchange by volume, according to CoinMarketCap, and has become a household name in large part due to its charismatic CEO Bankman-Fried, who is seen as one of the leaders of the crypto movement.
Since launching in 2019, FTX has raised $1.8 billion in funding from well-known firms such as SoftBank, Tiger Global and Sequoia, among others. FTX was valued at about $32 billion in September.
