In an unexpected twist, cryptocurrency exchange Binance said it is buying its rival FTX after the firm faced a liquidity crisis.
“This afternoon FTX asked for our help,” Zhao “CZ” Changpeng tweeted on Tuesday. “There is a significant liquidity crisis. To protect users, we have signed a non-binding [letter of intent] intends to fully acquire http://FTX.com and help cover the liquidity crisis.”
The deal comes after a public clash between the heads of the two companies, which had a broad sell-off in cryptocurrencies earlier on Tuesday.
FTX’s founder, Sam Bankman-Fried, is one of the most influential figures in the crypto space, becoming something of a one-man bank over the summer, shelling out around $1 billion to prop up ailing crypto firms as crypto prices plummeted .
On Tuesday, however, the tables turned when Bankman-Fried’s firm faced a run on its internal token, FTT.
“I’m actually shocked by this,” an operations executive told CNN Business. “FTX failing … would be kind of a Lehman Brothers event for the space. But if they’re successfully bailed out, that’s probably going to kick things off.”
Binance and FTX did not immediately provide details about the deal, noting that the two sides are 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 withdraw from the transaction at any time.”
Pressure on FTX began to build over the weekend when Zhao, the head of Binance, said his company would sell all of its holdings — about $580 million — in FTT.
“As a result of recent revelations that [come] light, we have decided to liquidate any remaining FTT on our books,” he tweeted
This story is developing and will be updated.