Binance Walks Away From Deal To Acquire FTX

Bitcoin Crashes to 2-Year Low Under $16,000

By: Aleksandar Gilbert Loading...

Binance Walks Away From Deal To Acquire FTX

Binance, the world’s largest crypto exchange, said it is walking away from its preliminary agreement to buy competitor FTX, an announcement that sent cryptocurrencies into a late afternoon tailspin Wednesday.

Binance said in a tweet while it intended to support FTX and provide liquidity, the Bahamas-based exchange is facing “issues” that are “beyond (its) control or ability to help.”

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition,” Binance tweeted.

FTX CEO Sam Bankman-Fried has told potential investors he needs funding to cover a shortfall as large as $8B, the Wall Street Journal reported.

Top cryptocurrencies, which had already fallen Monday on the news that FTX could not handle a run on its deposits and would need to be bailed out, fell to levels not seen since the collapse of crypto hedge fund Three Arrows Capital this summer.

ETH was trading just above $1,100, while Bitcoin fell below $16,000, according to data from The Defiant Terminal. Bitcoin last traded at these prices in November 2020.

Bankman-Fried first came to Binance CEO Changpeng Zhao (CZ) Monday seeking a deal, both men have said. Details of the deal were not disclosed, but CZ said Binance reserved the right to walk away from the deal should he find anything untoward in the course of due diligence.

FTX was on the verge of a bailout from Binance after a CoinDesk report published a week ago highlighted that FTX’s FTT token made up about 40% of assets backing crypto hedge fund Alameda Research, which is also owned by Bankman-Fried.

Concerns that Alameda and FTX may be insolvent triggered users to withdraw billions of dollars from the exchange and have roiled the crypto market since.

“Every time a major player in an industry fails, retail consumers will suffer,” Binance tweeted. “We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”

Total crypto market capitalization has dwindled to $843B, its lowest level since January 2021, according to Coingecko.