Binance offers to buy FTX's non-U.S. operations to fix 'liquidity crunch'

Binance, the world's largest cryptocurrency firm, has reached a woody with Sam Bankman-Fried's FTX to bargain the rival crypto speech for an undisclosed amount.

Binance CEO Changpeng Zhao tweeted Tuesday morning that "there is simply a important liquidity crunch" astatine FTX and that aft FTX asked for Binance's help, they "signed a non-binding LOI, intending to afloat acquire http://FTX.com and assistance screen the liquidity crunch."

Zhao added that Binance volition beryllium conducting afloat diligence successful the coming days, and the steadfast has the discretion to propulsion retired from the woody astatine immoderate time.

Sam Bankman-Fried confirmed the statement in a tweet this morning.

Binance and its founder, Changpeng Zhao, was 1 of FTX's earliest investors. In a tweet, Bankman-Fried said that Binance would be FTX.com's "first, and last" investor.

The acquisition impacts lone the non-US businesses, FTX.com. FTX.us will stay autarkic of Binance. The deal, according to Tweets from some Zhao and Bankman-Fried, rests connected a non-binding missive of intent, pending afloat owed diligence.

FTT, the token autochthonal to FTX, was sharply higher connected the news. It is up much than 26% successful the past 45 minutes. This comes aft a large sell-off that began Monday evening amid concerns surrounding the solvency of some FTX and its sister trading firm, Alameda Research. Meanwhile, Binance's autochthonal token BNB is up 20% implicit the aforesaid clip period.

Binance's Zhao said successful a tweet that helium expects FTT to beryllium "highly volatile successful the coming days arsenic things develop."

Earlier connected Tuesday, FTX had halted withdrawals from its platform, aft spooked investors attempted to propulsion their funds en masse. Investor assurance was shaken erstwhile Zhao tweeted over the play that the institution would merchantability its holdings of FTT.

Zhao said successful his tweet that Binance has astir $2.1 cardinal worthy of FTT and BUSD, the fiat-backed stablecoin issued by Binance and Paxos, combined."Due to caller revelations that person came to light, we person decided to liquidate immoderate remaining FTT connected our books," helium said.

The revelation besides sparked interest astir Alameda Research, Sam Bankman-Fried's trading steadfast and sister institution to FTX. A study past week connected the authorities of Alameda's finances showed a ample information of its equilibrium expanse is concentrated successful FTT and its assorted activities leveraged utilizing FTT arsenic collateral. Alameda has disputed that claim, saying FTT represents lone portion of its full equilibrium sheet.

"The Alameda hedge money is tied to FTX done a ton of FTT tokens and the rumors started that if they are utilizing each of these FTT tokens arsenic collateral… determination are 2 issues," said Jeff Dorman, main concern serviceman astatine Arca. "If the terms of FTT goes mode down past Alameda could look borderline calls and each kinds of pressure; 2 is if FTX is the lender to Alameda past everyone's going to beryllium successful trouble."

"What could person been conscionable an isolated contented astatine Alameda became a slope run," helium added. "Everybody started to propulsion their assets retired of FTX and there's this fearfulness that FTX would beryllium insolvent."

— CNBC's Kate Rooney and Tanaya Macheel contributed to this report.