FTX Inks Partnership Deal With Binance to Clear Withdrawal Backlogs Following Insolvency Concern.
Sam Bankman-Fried (SBF), CEO of FTX, has announced that the cryptocurrency exchange has reached a strategic partnership with Binance.
According to SBF, the cryptocurrency exchange is working to clear withdrawal backlogs caused by a widespread panic about FTX facing liquidity concerns.
In a tweet today, SBF 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.”
Notably, the strategic partnership will help clear out the withdrawal backlog FTX is currently faced with. SBF took time out to express gratitude to Changpeng Zhao, Binance CEO and founder, who agreed to the partnership, saying:
“A huge thank you to CZ, Binance, and all of our supporters. This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.”
Reacting to the development, CZ also took to Twitter to announce the partnership, saying:
“To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.”
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 https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ 🔶 Binance (@cz_binance) November 8, 2022
FTX’s troubles started after CZ announced that Binance would liquidate its FTT holdings as a post-risk management move. Traders sensed that the exchange might be on the brink of insolvency, thus prompting a huge amount of withdrawal requests from FTX to Binance.
Despite SBF dismissing all insolvency concerns, users were poised to move their funds out of FTX. As reported, FTX recorded nearly $1 billion in outflows in the past week after the exchange fell out with Binance.