Binance withdraws from FTX deal in major reversal

A day after lending a hand to FTX in the current liquidity crisis, crypto-currency exchange Binance has pulled out of the deal to acquire FTX’s non-U.S. assets.

Explaining the reason for the withdrawal, Binance said that during their corporate due diligence, they discovered major mismanagement of customer funds and alleged U.S. agency investigations into FTX. They decided not to pursue this “potential acquisition“.

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.

– Binance (@binance) November 9, 2022

The crypto-currency exchange has furthermore added :

“Initially, our hope was to be able to support FTX customers to provide liquidity, but the problems are beyond our control or ability to help.”

Binance also added that retail consumers have been on the receiving end whenever a major industry player fails. However, she added that “outliers that misuse user funds will be eliminated by the free market. But Binance believes that such episodes make the crypto ecosystem more resilient, as we’ve seen in recent years.

“As regulatory frameworks are developed and the industry continues to move toward greater decentralization, the ecosystem will become stronger,” she added.

Binance’s recent decision has once again put FTX in a very troubling position that is now exploring more options for potential investors. In a message to FTX employees seen by Reuters, FTX chief Sam Bankman-Fried wrote:

“I am working, as quickly as I can, on the next steps here. I wish I could give you all more clarity than I can.”

SBF also told his staff that his goal was to protect consumers and provide whatever assistance his staff and investors would need. He stated, “I will continue to fight for these (goals), to the best of my ability, as long as it is right for me to do so. I am exploring all options“.

Crypto-currency market crashes, bitcoin at two-year low

Shortly after Binance announced its decision to pull out of the FTX deal, the crypto-currency market crashed by another 10%, wiping out another $100 billion. Over the past five days, the crypto market has lost nearly 20% of its value due to the FTX episode.

The price of bitcoin (BTC) collapsed to its lowest level in two years, dropping below $16,000 earlier in the day. However, it has partially recovered from its new low of 2022. Currently, bitcoin is trading at a price of $16,699, down 9%, with a market capitalization of $320 billion.

The altcoins sector is also struggling, with Ethereum (ETH) falling 9% to below $1,200. All other altcoins in the top 10 also lost between 5 and 10 percent. Solana (SOL) has been the hardest hit by the FTX crisis, with a correction of over 50% on weekly charts.

In order to protect the FTX token from being sold, FTX’s sister company, Alameda Research, aggressively sold its SOL holdings and bought FTT in return. SOL’s price collapsed to less than $15.

My team has been working around the clock to avert further deterioration. I have faith that the situation is manageable following the wholistic approach together with our partners. Stay tuned #TRON @FTX_Official 🔥!

– H.E. Justin Sun🌞🇬🇩🇩🇲🔥 (@justinsuntron) November 10, 2022

Tron founder Justin Sun said his team has been working with FTX to find a solution to the problem. “My team has been working around the clock to prevent the situation from deteriorating further. I am confident that the situation is manageable through a comprehensive approach with our partners. Stay tuned“, he added.