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Crypto exchange Binance announced on Wednesday that is backing out of its previous plans to acquire FTX. The reversal would essentially leave Sam Bankman-Fried’s crypto exchange on the verge of collapse as it continues to face a liquidity crunch.
Binance’s decision to scrap its acquisition plans comes just one day after CEO Changpeng Zhao announced that his company reached a non-binding deal to acquire FTX’s non-U.S. businesses, CNBC reported. The executive did not disclose the amount but FTX was valued at $32 billion earlier this year. The deal would have solved FTX’s liquidity crisis.
Binance cited the result of its own due diligence as well as the latest reports as the reasons for its decision to back away from the deal. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” a Binance spokesperson told CoinDesk.
The company added that the issues it found in FTX are beyond its ability to help. However, Binance did not specify what those issues might be.
“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,” the spokesperson said. “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,” the rep added.
On Monday, Bankman-Fried tried to money from venture capitalists and other investors before approaching Binance. CZ initially agreed to help and later announced that FTX and Binance already signed a non-binding letter of intent for the latter’s acquisition of the former.
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