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Binance offers to purchase FTX’s non-U.S. operations to fix ‘liquidity crunch’

A deal has been reached between Binance and Sam Bankman-Fried’s FTX to acquire the rival crypto exchange for an undisclosed sum, rescuing the company from liquidity problems. Binance CEO Changpeng Zhao tweeted Tuesday morning that “there is a significant liquidity crunch” at FTX and that after FTX asked for Binance’s help, the company “signed a non-binding” agreement with the intent “to fully acquire and help cover the liquidity crunch. According to Zhao, Binance, originally based in China but now claims no official headquarters, will conduct full diligence over the next few days and may withdraw from the deal anytime. Sam Bankman-Fried confirmed the agreement in a tweet this morning.

This deal marks a major setback for a company that was valued by private investors at $32 billion earlier this year. Months prior, venture firm Sequoia Capital and BlackRock backed FTX at a $25 billion valuation. Forbes has pegged Bankman-Fried’s net worth at $17 billion, largely from his stake in FTX. In an interview with CNBC over the summer, Bankman-Fried explained that FTX is not immune to the crypto downturn but was in a stronger position than rivals due to its market share. He also said the company was more responsible for its growth than others in the industry. “We hired a lot less than most places did but we’ve also kind of kept our costs under control,” Bankman-Fried said. Binance and its founder, Changpeng Zhao, were among FTX’s earliest investors. In a tweet, Bankman-Fried said that Binance would be’s “first, and last” investor. The acquisition impacts only the non-U.S. businesses, will remain independent of Binance. However, according to a 2021 audit, the U.S. part of FTX accounted for just 5% of total revenue. FTX is based in the Bahamas, where Bankman-Fried resides. According to Tweets from both Zhao and Bankman-Fried, the deal rests on a non-binding letter of intent, pending full due diligence.

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