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Crypto exchange Binance plans to acquire major rival FTX

FILE PHOTO: A logo on the Binance exhibition space at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS/Benoit Tessier/File Photo

WASHINGTON/LONDON (Reuters) -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.

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.

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 1:1.

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, Reuters reported last week.

Reporting by Hannah Lang in Washington, Tom Wilson in London and Niket Nishant in BengaluruEditing by Arun Koyyur, Chizu Nomiyama and Matthew Lewis

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