Binance, the world’s largest cryptocurrency exchange, has signed a nonbinding agreement to buy FTX.com, a unit of major rival FTX, to help cover a “liquidity crunch” at the cryptocurrency exchange, Binance CEO Changpeng Zhao said on Tuesday, according to a Reuters report.
FTX has come under pressure after Zhao said on Sunday his firm would liquidate its holdings of FTX’s in-house token, FTT, due to unspecified “recent revelations.”
“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch,” said Zhao in a tweet, noting that Binance has the discretion to pull out from the deal at any time.
This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire https://t.co/BGtFlCmLXB and help cover the liquidity crunch. We will be conducting a full DD in the coming days.
— CZ ???? Binance (@cz_binance) November 8, 2022
In a tweet, Sam Bankman-Fried, FTX founder and CEO, said that teams are working on clearing out the current backlog of withdrawals and that all assets will be covered.
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 by Binance, as reported by Reuters reported last week.