Cryptocurrency

Binance Withdraws From Acquisition Of FTX

The deal between Binance and FTX.com didn’t go through as Binance reversed the acquisition. We are witnessing the end of Bankman-Fried’s crypto empire.

Top crypto exchange Binance Holdings, is abandoning its purchase of FTX.com, according to a series of the company’s statements on Twitter.

The change of thoughts came briefly after Binance CEO Changpeng Zhao announced the company’s plan to take over the world’s second-largest exchange.

Binance Cancels Acquisition

The shocking news has taken the media by storm. Binance recently revealed the reasons that reversed its decision to pursue FTX.com. According to Binance’s full statement, due diligence efforts failed and Binance was incapable of backstopping FTX or helping, “FTX’s customers to provide liquidity.”

In addition,

“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.”

Apparently, information that FTX misused customer funds and was under probe by the US regulators killed the deal. After the due diligence process, Binance decided to withdraw its offer to buy FTX.

What is Hiding in the Shadows?

Due diligence is frequently a complex part of the M&A process. It only took Binance one day to reconsider the decision, which adds fuel to speculations of FTX’s liquidity crisis.

The situation became even more dramatic and controversial after Justin Sun, the founder of TRON, said on Wednesday that he was working on a solution with FTX. The billionaire said in a tweet that the two parties were working on offering solutions to start a path forward, in addition to his support to all TRON holders on FTX.

FTX and FTX US are said to be under the investigation by the SEC and the U.S. Department of Justice with allegations of misuse of customer funds and violating securities laws. Rumors suggest that FTX’s losses may reach $8 billion, and the company is on brink of bankruptcy.

Blood in the Water

Following the announcement of Binance, the crypto market is sliding into chaos. Bitcoin, the largest cryptocurrency, found a 2-year low after dropping to $15.558 shortly after the revelation.

Currently, Bitcoin has recovered to around $16,700. However, analysts assess Bitcoin’s price is still volatile and there are many signs that there may be further declines.

Ether also decreased by 12%, hovering around $1,150. It is also the coin’s lowest since July. Other major cryptocurrencies continued to plunge for the third day.

FTT, FTX’s native token, is collapsing. The price dropped to $2.33 equivalent to a decrease of about 46%, as reported by CoinMarketCap. Users could not access the FTX.com domain name and website of trading company Alameda Research.

It’s also the darkest day of Solana (SOL). The coin dropped over 60% within 7 days, trading around the $15 mark. FTX and Alameda Research are the biggest holders of the coin.

The balance sheet of FTX and Alameda Research sparked questions regarding the exchange’s liquidity.

According to CoinDesk, FTX has a substantial amount of FTT and a $7.4 billion loan secured by digital currency. If the FTT price falls, FTX will be forced to default. CZ initiated the FTT collapse by confirming the FTT selloff to reduce losses.

When investors complained that it was unable to withdraw assets from the exchange to personal accounts, FTT prices continued to fall. Anyone who has followed Bankman-Fried during the market downturn will know that he was a “hero” in tough times.

The man offered a billion-dollar investment to save the cryptocurrency market. The former billionaire has made emergency loans totaling hundreds of millions of dollars to rescue his peers on the edge of bankruptcy.

The CEO of FTX Trading is active in communication operations to increase investor confidence in the cryptocurrency market. Many investors have lost faith in Sam Bankman-Fried and the FTX exchange owing to the risk of default.

We are seeing what happens when there is little oversight, and way too much optimism.

The post Binance Withdraws From Acquisition Of FTX appeared first on Blockonomi.

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With 5 years of experience as an editor, Matthew has been a crucial part of TheTechly since its inception. He looks after the editing of news content published on TheTechly. Apart from investing his time in editing, he also provides well-researched news articles for the U.S. niche.
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