Binance Backs Out of Buying FTX Crypto Exchange, Cites Mishandled Customer Funds and Regulator Investigations
Binance is pulling out of the deal to buy FTX. On Tuesday 8 November, Binance signed a letter of intention to acquire the failing crypto exchange, although at the time it said the agreement was subject to a due diligence process.
But as the contagion from the collapse of the FTX leads to a bloodbath in crypto asset prices, the quality of the FTX balance sheet and that of its sister company Alameda is likely to have deteriorated sharply.
As reported by Bloomberg the statement said: “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
FTX was the second-largest exchange in the crypto space and has been brought low by a run on deposits as customers fled the exchange because of fears that it might be insolvent.
That become a self-fulfilling prophecy that means the company could soon be seeking protection from its creditors.
Bellwether crypto asset bitcoin fell below $16,000 as the news spread, down 135 in the past 24 hours.
FTX Token (FTT) is down 55% after dropping 80% yesterday and is currently trading at $2.4.
Ethereum, the second largest asset by market cap, threatens to fall below $1,000, and is currently priced at $1,107.
Binance founder and CEO tweeted a moment ago: "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 of FTX.com."
Hinting at what had gone wrong at FTX, Binance boss CZ tweeted yesterday that there were two main lessons to be drawn from FTX’s demise: "Never use a token you created as collateral and secondly, don’t borrow if you run a crypto business - don’t use capital
Read more on cryptonews.com
