CEO of FTX Sam Bankman-Fried confirmed on Twitter on Tuesday that the exchange has signed a strategic agreement with Binance: “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.”
Shortly after, Binance CEO Changpeng Zhao (CZ) also confirmed the agreement:
“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 http://FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days.”
The price of FTT, the native token of the FTX exchange, fluctuated sharply after tweets of two billionaires. According to data from CoinMarketCap, FTT bounced from $14 to $21.15, or 46% in just 11 minutes. However, right after that, FTT quickly plummeted to $2.5 due to panic among investors. This drop lasted about 3 hours, causing the FTT to drop 719%.
Previously on Nov 2, a leaked balance sheet from Alameda Research raised concerns about the amount of FTT tokens they own in their asset holdings. According to CoinDesk, FTX holds a large amount of FTT and $7.4 billion worth of loans. If FTT plunges, FTX is at risk of default.
The bearish technical setup came as Changpeng “CZ” Zhao, the CEO of Binance, said his company would liquidate its entire FTT holdings in the coming months, on fears that the token might collapse in the same manner as Terra. Caroline Ellison, CEO of Alameda Research, said they would buy all of Binance’s FTT holdings for $22 each in order to minimize the impact on prices.
Sam Bankman-Fried once announced that he would spend a billion dollars to save the crypto market. This billionaire has offered many emergency loans worth hundreds of millions of dollars to bail out companies on the verge of bankruptcy. However, many investors now have lost confidence in Sam Bankman-Fried and the FTX exchange.
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