LONDON: Binance, the world’s biggest cryptocurrency platform, has agreed to buy its financially troubled rival FTX.com, according to an announcement on Tuesday (Nov 8) on Twitter.
In a tweet, Binance chief executive Changpeng Zhao said the group had signed a non-binding letter of intent “to fully acquire FTX.com”, which is suffering from “a significant liquidity crunch”.
No financial terms were disclosed for the proposed deal, whose announcement came as bitcoin and other cryptocurrencies initially slumped on Tuesday on fallout from FTX's woes.
Binance has offered to step in after revealing that it was liquidating its holdings of FTX's FTT token amid concerns about FTX's finances.
Bitcoin slid more than 5%, trading back under US$20,000 (RM94,730) before recovering, while FTX’s FTT token slumped 25% to its lowest levels since early 2021.
FTT is the 30th largest digital coin with a value of US$2 billion, according to CoinMarketCap. Amid talk of pressure on FTX's financials, FTT lost one-third of its value and dragged down other major digital assets.
The crypto industry is still licking its wounds since so-called stablecoin TerraUSD and a linked token, Luna, collapsed in May this year, knocking tens of billions of nominative value off the market.
The slump for bitcoin meanwhile comes after recent strong gains for the world’s leading cryptocurrency.
“Trouble is on the cryptocurrency market today as FTX coin continues to be in freefall ..., dragging sentiment,” said Walid Koudmani, chief market analyst at XTB.
“Binance ... announced that it will sell FTX tokens worth around US$2.1 billion as a result of uncertainty related to Alameda Research, a company linked to the FTX exchange.”
Koudmani added that financial documents belonging to Alameda “are pointing to issues with the balance sheet, namely asset value not corresponding to liabilities”.
Binance was founded in 2017 by a Chinese-Canadian entrepreneur but following regulations on its activities in China, moved its operations to Bahrain, Dubai, Paris and the Cayman Islands.
The company last Friday revealed that funds belonging to or intended for Iranians have flowed through its platform, risking that it may run afoul of US-imposed sanctions.
The news of the FTX deal on Twitter comes after Zhao recently said the social media platform now owned by Tesla boss Elon Musk could in the future be more integrated into the world of cryptocurrencies and blockchain.
Zhao, a major investor in Twitter, has been keen to stress that he is happy to let Musk do what he wants with the social media platform.
There are currently more than 10,000 cryptocurrencies sitting on many different blockchains following the creation of bitcoin in 2008.
In another development, cryptocurrency exchange Coinbase Global Inc assured investors of minimal exposure to FTX after concerns about the latter's financials dragged its digital coin FTT to its lowest since early 2021.
“Coinbase and our customers are not in any direct danger of liquidity or credit risk,” CFO Alesia Haas wrote in a blog on Tuesday.
“Regardless of whether the Binance/FTX transaction completes, we have very little exposure to FTX and we have no exposure to its token, FTT.” – AFP, Reuters
Source: The Sun Daily
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