Binance Walks Away from FTX Bailout Over Issues Beyond its Control
In a dramatic turn of events, Binance has confirmed that it is walking away from the FTX deal. This leaves the troubled exchange with no choice but to either find a new buyer at once or go bankrupt.
Binance is no longer considering an FTX acquisition
In a dramatic turn of events, cryptocurrency giant Binance has confirmed that it is walking away from a bailout of its smaller rival, FTX. The announcement comes shortly after Binance CEO Changpeng Zhao issued a letter of intent to acquire the distressed firm on Wednesday.
According to Binance, the acquisition did not go through due to several allegations surrounding the troubled exchange. These include claims of mishandled customer funds on FTX, which led to regulatory probes from the SEC and DOJ.
"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 FTX," wrote Binance in a tweet.
Initially, the company aimed to support FTX customers by providing financial liquidity to the exchange. But given the recent developments, Binance reckoned that the issue had become something beyond its control or ability to help.
How did the Binance-FTX fiasco come about
It all began on Sunday when Binance's CEO first tweeted his intention to sell the company's FTT token holdings. Though he didn't specify any reasons, CZ later revealed in a tweet that the move was seemingly against "people who lobby against other industry players behind their backs".
Speculations then started to make their rounds, with many claiming that the massive token dump by Binance was an attempt to take down FTX. This is especially so after FTX's CEO, Sam Bankman-Fried, showed great support for the Digital Commodities Consumer Protection Act (DCCPA) crypto bill, which many believe could pose significant threats to DeFi players.
While the true intention behind Binance's move is anyone's guess, the token sale has triggered plenty of FUD and brought much damage to FTX. With one of the largest crypto firms on the brink of collapse, many are expecting tougher times ahead for crypto.