Dem megadonor's crypto exchange forced to sell as liquidity concerns grow

The global crypto exchange Binance has agreed to acquire Democratic Party megadonor Sam Bankman-Fried’s crypto exchange FTX after the company was bludgeoned by a severe liquidity crunch over the past week.

“We have come to an agreement on a strategic transaction with Binance forFTX.com,” Bankman-Fried said in a series of tweets on Tuesday morning.

FTX’s sudden downfall — which Bankman-Fried said won’t affect its U.S. subsidiary FTX US — is hitting the crypto ecosystem after the 30-year-old billionaire spent roughly $40 million on super PACs and political campaigns before the midterm elections. FTX has also lobbied aggressively in support of bipartisan legislation from leaders of the Senate Agriculture Committee that would put its exchange and other crypto brokerages and trading platforms under the direct oversight of the Commodity Futures Trading Commission.

Withdrawals from FTX’s international platform were halted earlier Tuesday morning as the company dealt with the fallout of a report indicating that Alameda Research — a crypto trading fund that’s also owned by FTX — had propped up its balance sheet with billions of dollars in a highly illiquid digital token that had been issued by FTX. Binance CEO and co-founder Changpeng “CZ” Zhao announced that his platform would dump its holdings in the token in light of the revelation.

As fears of more crypto market contagion accelerated, FTX sought rescue financing to fund its continued operations.

“FTX asked for our help. There is a significant liquidity crunch,” Zhao tweeted on Tuesday, later adding that the deal is still pending.“This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time."