Binance Backs Out Of Deal To Acquire FTX

By Kevin • November 11, 2022 11:37 am • Comments

Based on a recent development, it looks like Binance is now backing out of the deal to acquire FTX which means it looks like this could spell trouble for FTX.

This announcement came one day after Binance CEO Changpeng Zhao announced that Binance had reached a nonbinding deal to acquire FTX.

FX was valued at around $32 billion by private investors and the fact that the exchange is now on the verge of collapse has significantly affected the overall crypto industry.

Trending: Ron’s Basement’s Cat Jasper Reaches $1.5 Million Market Cap Following Launch of Unicorn Fart Dust

The reason that Binance gave was so that the problems that FTX had was supposedly beyond Binance’s capability to help resolve.

CNBC reports:

“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity,” Binance said in a tweet Wednesday. “But the issues are beyond our control or ability to help.”

On Monday night, facing a liquidity crunch, Bankman-Fried was scrambling to raise money from venture capitalists and other investors before he went to Binance, according to sources with knowledge of the matter.

Zhao initially agreed to step in, but his company quickly changed course, citing reports of “mishandled customer funds and alleged U.S. agency investigations.”

It’s unclear who is next in line to buy the beleaguered crypto exchange. Bankman-Fried told investors that the company is facing a shortfall of up to $8 billion from withdrawal requests and needs emergency funding, according to a person familiar with the matter.

With the ongoing crypto winter, it looks like more and more crypto businesses are affected which only leaves more room for growth for those businesses that do survive.

Customers of FTX had demanded withdrawals worth around $6 billion and there is now speculation on whether or not the company can actually pay those withdrawals.

Investors are saying that FTX going down would not be a good thing for the crypto industry as it may slow down the growth of the industry temporarily.

So far, the exchange token used by the company, called FTT, had already lost around 80% of its value in a couple days which amounts to a loss of $2 billion per day.

CNBC concludes:

“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.

In the beginning, 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.

Every time a major player in an industry fails, retail consumers will suffer. 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.

As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”

Join the conversation!

We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.

 

Search ProCoinNews