Trouble for FTX began shortly after CoinDesk published a report about the balance sheet of Alameda Research, the corporate sibling of FTX. This prompted concerns about the financial stability of Sam Bankman-Fried's crypto empire -- which includes both companies -- leading to a liquidity crunch at FTX.
The situation escalated Sunday when Binance CEO Changpeng Zhao said he would sell his holdings of the FTT cryptocurrency issued by FTX.
After a months-long drama between both founders,Zhao’s original announcement to buy the struggling company came as a surprise.
“Things have come full circle, and FTX.com’s first, and last, investors are the same: we have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.)," Bankman-Fried tweeted on Tuesday.
Zhao then confirmed the deal on Twitter, saying the two exchanges signed a non-binding letter of intent, and that a full due diligence process would be underway in the next couple of days.
Bankman-Fried offered a “huge thanks” to Zhao and Binance, adding that the deal was “a user-centric development that benefits the entire industry.”
However, after Binance began reviewing FTX’s internal data and loan commitments, a source told CoinDesk that the results have led Binance to “strongly lean against completing the transaction.”
Several crypto tokens jumped in value after yesterday’s positive news, some rising as much as 37% in a single hour. However, in lieu of this new development, cryptocurrencies worsened, with Bitcoin revisiting its 2022 low of $17,000 and Ethereum back at its pre-Merge low of $1,160.
Solana’s native token -- backed by Alameda Research -- has plunged by 46%, losing half of its value this week alone.
Neither Binance or FTX have agreed to comment on this ongoing story.>