Binance Confirms The FTX Acquisition Won't Happen After All
Merely a day after Binance announced plans to acquire troubled cryptocurrency exchange FTX, the company says it is backing out of the anticipated deal. In an official statement posted on Twitter, Binance says it nixed the acquisition plans in the wake of news reports covering "mishandled customer funds and alleged US agency investigations" into FTX. Binance says it was planning to rescue FTX customers, especially those holding FTX tokens called FTT, but the issues at hand are allegedly beyond help or recovery. CEO Changpeng Zhao also tweeted the internal note regarding the canceled FTX plans that were shared internally a few hours 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 https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
It mentions that Binance had no idea about the fund-related irregularities at FTX and that Zhao was surprised when FTX chief Sam Bankman-Fried called him with an offer to rescue FTX from the verge of an impending collapse. Zhao has advised FTT coin holders against trading their crypto assets. In the meanwhile, multiple users have tweeted that their crypto withdrawals at FTX are not proceeding. FTX's official website currently has a red banner that says it is currently unable to process withdrawals, and it also asks users to stay away from fresh deposits. Multiple crypto outlets also claim that the FTX chief has already filed for bankruptcy (via Twitter).
The FTX crypto saga is murky
It was recently reported that a liquidity crunch forced FTX to approach Binance, the world's biggest cryptocurrency exchange by volume. Interestingly, Binance was among the first backers of FTX, which triggered a stratospheric rise in Bankman-Fried's net worth. However, relations between the two companies soured eventually, and barely a few weeks ago, the two crypto billionaires were locked in an ugly Twitter spat.
Earlier this week, the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) started looking into FTX for allegedly mishandling customer assets, according to a Bloomberg report. CoinDesk claims to have recently gotten its hands on the balance sheets of Alameda Research, a trading firm co-founded by Bankman-Fried, and it allegedly reveals that a majority of Alameda's assets are in the form of FTT tokens.
Alameda reportedly held billions worth of FTT tokens, which are generated by FTX, something that industry watchers and regulators have been suspecting for a while. In the past, however, the FTX chief claimed that Alameda is a "wholly separate entity," but holding assets of a sister company doesn't sound like one. Notably, the website of FTX's venture capital arm, FTX Ventures, has been taken offline. Moreover, the official Alameda Research website has also been made private and it is no longer publicly accessible. As for investors, they are now expecting a total wipeout, while token holders are staring at a long and drawn-out legal recourse — and with the crypto industry bleeding billions, a miracle rescue also looks unlikely.