Binance, the world’s largest cryptocurrency firm, has reached a deal with FTX to buy the rival crypto exchange for an undisclosed amount and rescuing the company from a liquidity crisis.
“This afternoon, FTX asked for our help,” tweeted Zhao 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.”
Zhao added that Binance will be conducting full diligence in the coming days, and the firm has the discretion to pull out from the deal. Thea announcement took by surprise analysts .
Binance, which dominates the $1 trillion crypto industry with over 120 million users, is currently under investigation by the U.S. Justice Department into possible violations of money-laundering rules.
The deal marks a collapse for a company that earlier this year was valued by private investors at $32 billion and after a public clash between the heads of the two companies that fed a broad selloff in cryptocurrencies earlier on Tuesday.
“There is a lot to cover and will take some time,” Zhao tweeted.
Pressure on FTX began building over the weekend when Zhao said his company would sell all of its holdings — about $580 million — in FTT.