Binance deal for FTX collapses | Business and Economy News

Binance pulled out of the deal due to its corporate due diligence and reports of mishandled funds.

A deal for leading cryptocurrency exchange FTX has collapsed, as bigger rival Binance said it was pulling out after doing due diligence on the proposed acquisition.

Binance signed a non-binding agreement on Tuesday to buy FTX’s non-United States unit to help cover a “liquidity crunch” at the rival exchange, but the deal was subject to further 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,” Binance said in a statement on Wednesday.

A representative for FTX did not immediately respond to a request for comment, but Chief Executive Officer Sam Bankman-Fried told employees in a Slack message, viewed by the Reuters news agency, that Binance had not previously expressed reservations about the deal.

“We obviously just saw Binance’s statement,” Bankman-Fried said in the message. “They relayed that to the media first, not to us, and had not previously informed us or expressed those reservations.”

“I’ll keep fighting for those, as best as I can, as long as it’s correct for me to. I’m exploring all the options,” he said.

Bankman-Fried also told investors on Wednesday the cryptocurrency exchange needed emergency funding to cover a shortfall of up to $8bn due to withdrawal requests received in recent days, the Wall Street Journal reported, citing people familiar with the matter. The withdrawals were driven by speculations about FTX’s financial health.

Crypto hit

The turmoil over FTX has hit crypto prices. Bitcoin, the biggest cryptocurrency by market value, was last down 13 percent on the day at $16,277 and is down more than 60 percent for the year.

Binance CEO Changpeng Zhao earlier on Wednesday tweeted a letter to staff saying there was no “master plan” behind the deal and that “FTX going down is not good for anyone in the industry”, nor was it a win.

Zhao also urged investors not to trade FTT tokens and to ignore the prices.

Binance had not been the only possible partner sought. Prior to the Binance proposed deal, Bankman-Fried approached cryptocurrency exchange OKX on Monday morning but the exchange declined to move forward. is also facing scrutiny from US regulators over its handling of customer funds, as well as its crypto-lending activities.

Cryptocurrencies have been devastated this year as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak – to $1.07 trillion.

The latest development is a significant reversal of fortunes for Bankman-Fried who had positioned himself as the industry’s saviour by rescuing rivals who had gotten themselves into trouble earlier in the year.

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