The winger had agreed to join the Black Cats in a deal worth £30 million, and now Palace are reportedly involved, as per BBC Sport.
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The 21-year-old is expected to travel to England for a medical, and it is up to him which club he decides to join.
Sunderland have offered Fofana a five-year-deal at the Stadium of Light.
Fofana is eager to compete in Europe, with Sunderland and Palace having both qualified for the UEFA Europa League this season.