Binance has agreed a lightning-quick non-binding deal to bail out rival cryptocurrency exchange FTX’s non-US operations.

The latter faced a ‘liquidity crunch’ after concerns about its financial health reportedly led to $6 billion of withdrawals in just three days.

The crisis was triggered by reports late last week that a notable portion of FTX’s sister investment fund Alameda Research’s balance sheet was made up largely of its native FTX Token (FTT) and Solana’s SOL token. 

In a now-deleted Twitter thread, FTX CEO Sam Bankman-Fried blamed the turbulence on Binance and its CEO Changpeng Zhao, who had revealed plans to liquidate any remaining FTT on Binance’s books – reported to be worth more than $500m.

“A competitor is trying to go after us with false rumors,” he tweeted. “FTX is fine. Assets are fine. FTX has enough to cover all client holdings.

“We don’t invest client assets (even in treasuries)… we have a long history of safeguarding client assets, and that remains true today.

“I’d love it,  @cz_binance, if we could work together for the ecosystem.”

FTT continued to plummet – at the time of writing (7am UK) it had fallen 71% in the previous 24 hours to below $5 – and non-fiat withdrawals outside the US were halted, despite FTX claiming just a day earlier that there was no risk of this happening.

Zhao revealed the news of the hastily agreed takeover with a tweet: “This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI (letter of intent), intending to fully acquire and help cover the liquidity crunch. We will be conducting a full DD (due diligence) in the coming days.”

The two exchanges’ US operations will remain separate, should the deal go through.

Having deleted the earlier thread, Bankman-Fried wrote another from a very different viewpoint. “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.

“I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.

“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle… we apologize for that… the important thing is that customers are protected.”

Binance is the world’s largest crypto exchange by volume, while FTX is within the top five. FTX is backed by world-leading VCs Temasek, BlackRock, Coinbase Ventures and Sequoia Capital.

Zhao wrote in a further tweet: “All crypto exchanges should do merkle-tree proof-of-reserves. Banks run on fractional reserves. Crypto exchanges should not. Binance will start to do proof-of-reserves soon. Full transparency.”

Concerns were raised on Twitter over whether the deal would violate antitrust laws. “Next time, check the compliance of your tweet with antitrust laws before you post,” said Thibault Schrepel, an Amsterdam University academic specialising in blockchain and antitrust issues. 

“At this stage, I wouldn’t be surprised to find this tweet in a forthcoming court document/antitrust litigation.”

Cryptocurrency shorts

Cardano founder Charles Hoskinson believes Twitter under Elon Musk could successfully incorporate cryptocurrency payments. “It is an interesting thing to blend a social network with a financial stack,” he told Euronews Next. “Twitter is uniquely well-suited to do this. It’s early days and what he’s probably going to do is come in and gut the company, fire half the people, move it to Austin, put very strong leadership that he trusts and then pull out and let them kind of run it and then focus a lot more on merging of those two worlds; the social network side and the FinTech stack. It remains to be seen if he’s going to verticalize it and do it all himself or if he’s going to do it with partners.”

Eterlast will bring sports and entertainment communities into the metaverse by partnering with world-leading sporting organisations. The firm has secured $4.5m to develop Web3-branded games and begun working with two of the largest global sports – boxing and rugby. House of Boxing, which launches in December via a partnership with Queensberry Promotions, will see the key moments of the best fights from Mike Tyson, Tyson Fury and Ricky Hatton sold. Supernode Global, Play Ventures, Active Partners, Founders Factory, Stake Capital and Immutable X participated in the venture round.

Fordefi has raised $18 million in a seed round to build an institutional MPC wallet and gateway for Web3 venture funding. Led by Lightspeed Venture Partners, it also featured Pantera Capital, Jump Crypto, PayPal Alumni and DeFiance Capital.

The founders of Bored Ape Yacht Club say ongoing NFT royalties are “the single most important factor that brought [creators and artists] into the ecosystem”. This was in response to OpenSea’s recent announcement that it would follow other marketplaces in removing creator royalties for legacy collections.

Crypto prices

The overall market cap of the 21,600 coins is at $909 billion at the time of writing (7am UK), a 7.5% decrease in the last 24 hours.

For round-ups of recent cryptocurrency news developments, click here.

For valuations of the top 100 coins by market cap in US dollars, plus 24-hour price change, see below.