After widespread reports that troubled crypto exchange FTX was set to be rescued by rival Binance, various outlets are now reporting that deal has fallen through.
Binance had said it has signed a letter of intent to acquire its most formidable rival FTX, delivering a surprising twist to days-long public spat between the world’s two largest crypto exchanges that contributed to several digital tokens taking a tumble, reported TechCrunch.
The deal followed Binance founder Changpeng Zhao and FTX founder Sam Bankman-Fried’s months-long clash on social media, which escalated previously
Zhao said Binance reached the decision after the three-year-old exchange FTX asked the crypto behemoth for help. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” he said in a tweet.
“Binance has the discretion to pull out from the deal at any time,” Zhao, more popularly known as CZ, cautioned. But “the important thing is that customers are protected,” said Bankman-Fried, or as many call him, SBF.
Binance, the world’s largest crypto exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two started to wither. The firms haven’t disclosed the financial terms of the deal, but it is likely not great / utterly terrible for investors of FTX, which was valued at $32 billion in a financing round earlier this year.
The closure of the deal may attract regulatory scrutiny, reported TechCrunch.
Now, BBC News is reporting that, due to various difficulties, the deal has fallen through.
Under the headline “FTX: Cryptocurrency giant Binance walks away from bailout,” BBC News reports that the world’s biggest cryptocurrency exchange has walked away from a bailout deal of its smaller rival FTX, saying that that after due diligence, it would not pursue the deal.
The story said reports of “mishandled customer funds and alleged US agency investigations” had swayed Binanace’s decision.
FTX had been struggling with a surge in withdrawals that caused a “liquidity crunch”. Concerns about FTX’s financial health reportedly triggered $6 billion of withdrawals in just three days.
The story adds that Reuters news agency reported that the US Securities and Exchange Commission (SEC) was investigating FTX’s handling of customer funds and its crypto-lending activities. The markets regulator was examining whether the platform had followed securities laws about keeping customer assets separate and whether it had traded against customers.