Binance Backs Out from FTX Deal in Major U-Turn

UTC by Bhushan Akolkar · 3 min read
Binance Backs Out from FTX Deal in Major U-Turn
Photo: Shutterstock

Binance backs out of the FTX deal citing concerns over the mishandling of customers’ funds by FTX and alleged US agency investigations. The Crypto market loses another $100 billion.

A day after lending a helping hand to FTX amid the current liquidity crisis, crypto exchange Binance has backed out of the deal about acquiring the non-US assets of FTX.

Explaining the reason behind this blackout, Binance said that during their corporate due diligence, they found major mishandling of customer funds and alleged US agency investigations into FTX. They decided not to pursue the “potential acquisition”.

The crypto exchange further added:

“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 also added that retail consumers have been on the receiving end every time a major industry player fails. However, it added that “outliers that misuse user funds will be weeded out by the free market”. But Binance believes that such episodes make the crypto ecosystem more resilient as seen over the past few years.

“As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger,” it added.

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

“I’m 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 offer any help his staff and investors would need. He said: “I’ll keep fighting for those (goals), as best as I can, as long as it’s correct for me to. I’m exploring all the options”.

Crypto Market Crash, Bitcoin At Two-Year Low

Soon after Binance announced its decision to back out of the FTX deal, the crypto market came plummeting by another 10% wiping out another $100 billion. Over the last five days, the crypto market has lost nearly 20% of its value due to the FTX episode.

The Bitcoin (BTC) price collapsed to a two-year low slipping under $16,000 earlier today. However, it has partially recovered from its new 2022-low. Currently, Bitcoin is trading 9% down at a price of $16,699 with a market cap of $320billion.

The altcoin space is also bleeding as Ethereum (ETH) tanks by 9% slipping under $1,200. All of the other top-ten altcoins have also lost between 5-10%. The biggest hit with FTX’s crisis has been faced by Solana (SOL) which has corrected over 50% on the weekly charts.

In order to protect the FTX token from selling, FTX’s sister concern Alameda Research has been selling its SOL holdings aggressively and buying FTT against that. The SOL price has collapsed to under $15.

Tron founder Justin Sun said that his team has been working with FTX to bring out a solution to this matter. “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,” he added.

Altcoin News, Blockchain News, Business News, Cryptocurrency news, Deals News
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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