Binance said Tuesday it has signed a letter of intent to acquire its most formidable rival FTX, delivering a surprising twist to days-long public spat between the world’s two largest crypto exchanges that contributed to several digital tokens taking a tumble Tuesday.

The deal follows Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried’s months-long clash on social media, which escalated earlier this week.

Zhao (pictured above) said Binance reached the decision after the three-year-old exchange FTX asked the crypto behemoth for help. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” he said in a tweet.

“Binance has the discretion to pull out from the deal at any time,” Zhao, more popularly known as CZ, cautioned. But “the important thing is that customers are protected,” said Bankman-Fried, or as many call him, SBF.

Binance, the world’s largest crypto exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two started to wither. The firms haven’t disclosed the financial terms of the deal, but it is likely not great / utterly terrible for investors of FTX, which was valued at $32 billion in a financing round earlier this year.

The closure of the deal may attract regulatory scrutiny.

The two billionaires have been hurling snarky remarks at each other for several months, but the relationship hit an all-time low earlier this week after Zhao said that Binance was selling its holdings of FTT, the native token of FTX exchange, that it had received as part of an exit from the firm last year.

Zhao said the firm was liquidating its FTT holdings as a “post-exit risk management,” giving some credence to a widely circulated rumor about Alameda Research’s concerning financial health. Alameda and Bankman-Fried had earlier refuted such concerns.

Bankman-Fried also founded the prop trading and market making firm Alameda, which at least has some exposure to the FTT tokens. FTT token slid to as low as $14.32 from $25.47 earlier on Tuesday as investors lost faith, according to Binance’s trading view. (Hours after the news broke, the token dropped to as low as $2.51 before slight recovery.)

In a note to clients earlier Tuesday, research firm Bernstein suggested that FTX should consider shutting down Alameda due to the perceived risks.

“Binance is the immediate trigger, but FTX should resolve its relationship with Alameda. FTX cannot carry on its existing ownership structure with Alameda. FTX needs to completely ring-fence itself and potentially shut down the Alameda prop trading business. If Alameda’s trading operations impact FTX’s customer confidence (perception of Alameda trading against users on FTX and Alameda’s state of finances), then there is more downside to running Alameda than otherwise,” a Bernstein analyst wrote in the note.

Bankman-Fried offered a “huge thanks” to Zhao and Binance on Tuesday, adding that the deal was “a user-centric development that benefits the entire industry.”

“CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world,” Bankman-Fried said in a tweet.

FTX is working on clearing the withdrawal backlog, he said. “This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. — we apologize for that,” he said.

Binance is the world’s most valuable crypto exchange, estimated to be worth over $300 billion. FTX was valued at $32 billion in its most recent funding round (a Series C) in January this year. The firm counts Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, Bond and Iconiq Growth among its long list of backers. FTX and its FTX US business raised over $2.2 billion across several funding rounds, according to Web3 Signals, a crypto dealbook.

Tuesday’s announcement shocked the business world and even the crypto community, which has grown accustomed to topsy-turvy developments this year. Bankman-Fried was hailed as a crypto savior earlier this year after he bought a series of firms. FTX Ventures, the ventures arm of the crypto exchange, is also a major investor in a large number of crypto startups including Aptos Labs, Messari, Sky Mavis, LayerZero, YugaLabs and 1inch Network, according to Web3 Signal.

Bankman-Fried attempted to raise additional capital from investors before approaching Binance, according to a source familiar with the matter. Axios suggests that many existing investors are surprised by the move.

Scores of companies are suffering from this week’s event. Shares of Bankman-Fried-backed Robinhood dropped nearly 20%, whereas crypto exchange Coinbase was down about 10% to the day at the time of publication.

In a statement after the Binance-FTX deal — and the subsequent crypto prices tumble — Coinbase assured investors that it has no exposure to the FTT tokens and “very little” exposure to FTX.

“Currently we have $15 million worth of deposits on FTX to facilitate business operations and client trades,” Coinbase CFO Alesia Haas wrote in a blog post. “We have no exposure to Alameda Research, and we have no loans to FTX. Second, as a publicly traded company in the US, we’ve also built our business in a way that allows us to be transparent about our track record, balance sheet strength, and effectively and prudently manage risk for our customers and ourselves.”

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