The crypto giant Binance has showcased its interest in acquiring the digital assets exchange FTX after the latter revealed that it has a liquidity crisis. The liquidity crisis appears amid the ongoing market downturn that has lasted for months.
Binance Agrees To Acquire FTX
In a November 8 blog post, Changpeng Zhao, the CEO of Binance, confirmed that he is willing to purchase FTX after the crypto exchange publicly confirmed that it was currently facing liquidity challenges. The deal would include its FTX US company.
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 https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ Binance (@cz_binance) November 8, 2022
The looming purchase deal has stirred up a heated discussion within the crypto community on the fate of digital assets, including non-fungible tokens, gaming activities, and metaverse projects involved in the crypto exchange.
It’s worth noting that FTX made significant investments during the crypto bull market in 2021 and earlier this year, including launching its NFT marketplace offering NFTs minted on Solana and Ethereum.
Furthermore, the crypto exchanges heavily seeded on esports sponsorship deals established an infrastructure division and launched its $2 billion FFT Venture investments arm. The FTX had also invested heavily in other Web3 projects.
FTX Faces The Wrath Of The Bear Market
Sadly, a lot of its investments have declined during the recent crypto downturn, causing many digital assets to lose over 70% of their value. The NFT market has been hit harder, dropping more than 95%, from over $440 billion in sales volume to only $5 billion by the end of the third quarter this year.
In a November 9 blog post, Sam Bankman-Fried, the founder of FTX, clarified the anticipated purchase deal would not impact the FTX US. In that context, the FTX NFTs marketplace, which includes a drop for NBA star Stephen Curry, will not be impacted. FTX US established the NFT marketplace in October.
6) (Note that https://t.co/fCrWGQ4y7w and https://t.co/Ju8CkfrLYH–two separate companies–are not currently impacted by this. https://t.co/fCrWGQ4y7w’s withdrawals are and have been live, is fully backed 1:1, and operating normally.)
— SBF (@SBF_FTX) November 8, 2022
Nonetheless, its investment arm, featuring popular NFT and Web3 gaming creators, including Bored Ape Yacht Club creator Yuga Labs, the team behind NFT project Doodles, and Mini Royale: Nations developer Faraway, may go along with the exchange to Binance.
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