Another Twist in the Story as Binance backs out of the FTX Acquisition Deal The company cited the reasons as mishandling customer funds, alleged US agency investigations as well as corporate due diligence
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Binance on Wednesday announced to have backed out from the acquisition deal of FTX on Twitter. The company cited the reasons as mishandling customer funds, alleged US agency investigations as well as corporate due diligence.
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 https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
The news broke out a day after Changpeng Zhao, CEO, Binance announced the non-binding deal to acquire FTX with finanicial details undisclosed. The move was considered a rescuing act from Binance amid FTX's liquidity crisis. Binance backing out of the deal leaves FTX at the edge of collapse.
Binance was the first investor that backed Sam Bankman-Fried and FTX. Amid the growing popularity of FTX, the relationship between the two crypto giants went from bad to worse. The relationship hit rock-bottom when Binance announced the liquidation of holdings of FTT, FTX's native token that Binance received as a part of exit from the company last year.
Zhao in a memo shared to his employees said that he did not 'mastermind the collapse of FTX'. He also stated FTX going down is not good for anyone in the industry and should not be perceived as a win for Binance. Zhao instructed the employees of Binance to not trade FTT tokens while the situation unfolds further.
FTT continues to fall in valuation. The valuation of FTT at the time of writing the article is $2.69. FTT had already lost 80 per cent of its value between Monday and Tuesday wiping out more than $2 billion in a day.
The ripple effect on the entire cryptocurrency market is evident with Bitcoin falling a further 15 per cent on Wednesday after a 12 per cent drop on Tuesday and was trending below $16000 for the first time since November 2020. However, Bitcoin has since been trading at approximately $16,700.
