Crypto giant Binance signed a non-binding agreement to buy rival FTX’s non-US unit, FTX.com, to help cover a “liquidity crunch” at the cryptocurrency exchange, in a surprise move that lifted cryptocurrencies on Tuesday.

Binance CEO Changpeng Zhao said in a tweet that FTX, run by billionaire Sam Bankman-Fried, had “asked for our help” after “a significant liquidity crunch”.

He said Binance, the world’s biggest crypto exchange, will be conducting due diligence in the coming days as the next step towards an acquisition of FTX.com. The US operations of Binance and FTX are not part of the deal, Bankman-Fried said in a separate tweet.

The deal is the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to US$1.07-trillion.

It also underscores an abrupt reversal of fortune for Bankman-Fried, who had positioned himself as the industry’s saviour by rescuing rivals who had got into trouble earlier in the year.

The deal comes after the in-house token of major crypto exchange FTX slumped, losing a third of its value and dragging down other major digital assets, amid talk of pressure on FTX’s financials.

Binance, which dominates the crypto industry, with over 120 million users, is currently under investigation by the US justice department into possible violations of money laundering rules.

Buoyed

News of the deal buoyed major cryptocurrencies. FTX token — which gives holders discounts on FTX trading fees — was last trading at 18.38. The token was earlier down more than 33%, its lowest level since early 2021. The token, known as FTT, is the 28th largest digital coin, with a value of $1.73-billion, according to CoinMarketCap.

Bitcoin, the biggest digital token, trimmed earlier losses and was last at $20 165.

Crypto users raised questions on Twitter last week about FTX’s token following a report by news website CoinDesk on a leaked balance sheet from Alameda Research, a trading firm founded by Bankman-Fried that has close ties with FTX.

On Sunday, Zhao said his firm would liquidate its holdings of the FTX token due to unspecified “recent revelations”. Bankman-Fried had initially said the exchange was “fine” and that concerns were “false rumours”.

In a tweet on Tuesday, he said his teams were working on clearing out the withdrawal backlog: “This will clear out liquidity crunches. This is one of the main reasons we’ve asked Binance to come in.”