Cryptocurrency exchange Binance withdraws their rescue of FTX only one day after unveiling a takeover proposal
FTX will not be rescued by its main competitor. Binance claimed it didn’t like what it saw in the company’s books one day after unveiling a possible agreement to purchase the cryptocurrency exchange. “As a consequence of corporate due diligence, as well as the current press stories alleging mismanaged client cash and suspected US government investigations,” Binance tweeted on Wednesday afternoon, “we have chosen not to pursue the prospective purchase of FTX.” “We hoped to assist FTX’s clients in providing liquidity, but the challenges are beyond our control or capacity to assist.”
The failed takeover effort wraps off a turbulent week for FTX. Coinbase produced a report on November 2nd revealing that the bitcoin exchange was experiencing a liquidity problem. In reaction to the story, Binance CEO Changpeng Zhao declared that the business will sell $529 million worth of FTX’s FTT token, causing the cryptocurrency’s value to plummet and sparking a public feud between the rival exchanges.
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.
Even when the transaction was originally disclosed, the prospects for it continuing ahead were bleak at best, with Zhao emphasising at the time that the agreement was non-binding. “We are analysing the issue in real time since it is quite dynamic.” Binance has the option to withdraw from the transaction at any moment,” he stated on Tuesday. The Wall Street Journal and Coinbase both reported the next morning that Binance was seriously considering abandoning the rescue.
Less than an hour later, Bloomberg reported that the US Securities and Exchange Commission was looking into FTX to see whether it had mismanaged client assets. It’s worth mentioning that the Department of Justice and the Securities and Exchange Commission are also looking into Binance.