Binance has tentatively agreed to purchase FTX following the collapse of its exchange token, FTT, and growing liquidity problems. The pair are among the world’s largest cryptocurrency exchanges.

The surprise acquisition is not official yet; Binance has only signed a non-binding letter of intent and the deal is subject to due diligence.

The price of FTT dropped by over 80% after the announcement, hitting a low of $3.12. The token has lost almost $3 billion from its market capitalization in the past five days.

That FTX chose to be acquired by Binance suggests that the exchange was in such a troubled financial situation that it had no other choice but to accept Binance’s offer. Earlier today, the exchange suspended customer withdrawals after its customers rushed to the exit.

“FTX must have had a massive hole in its balance sheet (likely [its sister company] Alameda) that could not be plugged by other financiers which forced SBF [(Sam Bankman-Fried)] to kiss the ring,” commented Wassielawyer, a pseudonymous crypto lawyer. 

The empire of Bankman-Fried, whom Fortune once called the “next Warren Buffett”, might be crumbling. Do Kwon, the founder of collapsed blockchain Terra, posted a meme of a fallen Game of Thrones king to poke fun at how Bankman-Fried had given in to one of his major competitors. 

Even if FTX weathers its liquidity crisis with the help of Binance, there is concern that Alameda Research, a trading company owned by FTX founder Sam Bankman-Fried, could buckle, spreading chaos throughout the wider crypto market. 

Binance has said nothing about acquiring Alameda, which according to documents leaked by CoinDesk uses FTT as collateral for its loans. 

If Alameda went bust and defaulted on its loans, those that lent money to Alameda would take a massive financial hit. According to the CoinDesk leak, Alameda’s FTT position was worth $3.8 billion as of June 30.

Acquiring one of the largest crypto exchanges would only consolidate Binance’s power. The company also controls Binance Chain, the second largest blockchain by total value locked, and BUSD, the third largest stablecoin by market capitalization.

No wonder people call Zhao the king of crypto.