Following a liquidity crisis at FTX, CEO Sam Bankman-Fried announced that Binance will likely acquire FTX Exchange, pending due diligence.

Bankman-Fried confirmed the agreement in a tweet this morning.

Shortly after the announcement, Binance CEO Changpeng Zhao tweeted that FTX asked for help due to “a significant liquidity crunch.” Binance has signed a non-binding LOI with the intent of acquiring

Zhao stated that Binance has the option to back out of the deal at any point during negotiations and that complete due diligence will be conducted in the upcoming days.

The deal represents a devastating collapse for a business that was valued by private investors at $32 billion earlier this year. A few months ago, BlackRock and the venture firm Sequoia Capital backed FTX at a $25 billion valuation. According to Forbes, Bankman-Fried has a net worth of around $17 billion, mostly derived from his ownership of FTX.

Bankman-Fried told CNBC in a September interview that FTX is not “immune” to downturns in the market, but is in a better position than rivals since it had seized market share. He added that compared to other businesses in the sector, the company has grown more responsibly.

“We hired a lot less than most places did but we’ve also kind of kept our costs under control,” added Bankman-Fried.

The acquisition would only affect’s non-American operations. However, the U.S. division of FTX only accounted for 5% of total revenue based on a 2021 audit.

After the announcement, the price of FTX's native token, FTT, momentarily rose before dropping by more than half. In response to worries about the viability of both FTX and its sibling trading firm, Alameda Research, a significant sell-off continued throughout the day.

Swan Bitcoin CEO Cory Klippsten explains that issues began to arise for FTX when Alameda's balance sheet was leaked and revealed the exchange's exposure to various altcoins and speculative investments with user funds.

Zhao shared the same sentiment and included in his announcement that he expects FTT to be “highly volatile in the coming days as things develop.”

FTT traded as low as $2.75 or 87% below its $22 price from the morning. 

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