In an unexpected twist, the cryptocurrency exchange Binance said it is buying its smaller rival FTX after the firm faced a liquidity crisis that rattled digital assets and sparked contagion fears. “This afternoon, FTX asked for our help,” tweeted Zhao “CZ” Changpeng on Tuesday. “There is a significant liquidity crunch. To protect users, we signed a non-binding [letter of intent] intending to fully acquire http://FTX.com and help cover the liquidity crunch.” The announcement stunned crypto investors, as a tie-up between the two largest crypto exchanges by volume would mark a tectonic power shift in the industry. The news prompted a brief recovery in digital assets but wasn’t enough to calm anxious investors. Bitcoin tumbled more than 10% Tuesday to hit a 52-week low around $17,600, according to CoinDesk. FTX’s in-house coin FTT cratered, losing 85% of its value. Other digital assets and equities tied to the industry, such as Coinbase, also fell. FTX’s founder and CEO, Sam Bankman-Fried, is one of the most influential figures in the crypto space, and became something of a one-man bank over the summer, shelling out around $1 billion to prop up ailing firms as crypto prices sank. On Tuesday, though, the tables were turned as Bankman-Fried’s firm faced a run on FTT. “I’m actually shocked by this,” an industry executive told CNN Business. “FTX failing … would be kind of like a Lehman Brothers event for the space. But if they have been successfully bailed out, then that would probably head things off at the pass.” Binance and FTX didn’t immediately provide details about the deal, and noted the two sides were figuring it out in real time. “There is a lot to cover and will take some time,” Zhao tweeted. “This is a highly dynamic situation, and … Binance has the discretion to pull out from the deal at any time.” Fears over FTX and Alameda Research, Bankman-Fried’s trading house, began last week after a report published by crypto news site CoinDesk suggested that much of Alameda’s balance sheet was made up of FTT, which is a relatively illiquid token. On Sunday, Zhao, the head of Binance, said his company would sell all of its holdings — about $580 million — in FTT, “due to recent revelations.” His announcement spooked investors and caused FTT to plummet. In essence, Bankman-Fried was getting a capital call for $580 million, and didn’t have the liquidity to meet it. It’s an “unbelievable situation, and basically a complete shift from anything anyone would’ve expected even a week ago,” the industry executive told CNN Business.