Binance, the world’s largest crypto exchange, is buying struggling rival FT

New York
CNN Business
 — 

In an unexpected twist, the cryptocurrency exchange Binance said it is buying its rival FTX after the firm faced a liquidity crisis.

“This afternoon, FTX asked for our help,” tweeted Zhao “CZ” Changpeng on Tuesday. “There is a significant liquidity crunch. To protect users, we signed a non-binding [letter of intent] intending to fully acquire http://FTX.com and help cover the liquidity crunch.”

The deal comes after a public clash between the heads of the two companies that fed a broad selloff in cryptocurrencies earlier on Tuesday.

FTX’s founder, Sam Bankman-Fried, is one of the most influential figures in the crypto space, and became something of a one-man bank over the summer, shelling out around $1 billion to prop up ailing crypto firms as crypto prices sank.

On Tuesday, though, the tables were turned as Bankman-Fried’s firm faced a run on its in-house token, FTT.

“I’m actually shocked by this,” an industry executive told CNN Business. “FTX failing … would be kind of like a Lehman Brothers event for the space. But if they have been successfully bailed out, then that would probably head things off at the pass.”

Binance and FTX didn’t immediately provide details about the deal, and noted the two sides were figuring it out in real time.

“There is a lot to cover and will take some time,” Zhao tweeted. “This is a highly dynamic situation, and … Binance has the discretion to pull out from the deal at any time.”

Pressure on FTX began building over the weekend when Zhao, the head of Binance, said his company would sell all of its holdings — about $580 million — in FTT.

“Due to recent revelations that have [come] to light, we have decided to liquidate any remaining FTT on our books,” he tweeted

This story is developing and will be updated.