Binance, the world’s largest cryptocurrency exchange, has backed out of a deal to bail out rival exchange FTX, citing due diligence concerns.
In a statement, it said it decided to back out of the deal over “mishandled customer funds and alleged US agency investigations.” The US Securities and Exchange Commission (SEC) has opened an ongoing investigation on FTX after allegations of mishandling customer funds and crypto lending.
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 https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
News of recent issues over FTX’s financial health triggered a massive $6.2 billion spike in withdrawals due to a “liquidity crunch” over a three-day period.
Binance announced on Twitter concerns over FTX were “beyond our control or ability to help.”
It continued: “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
SBF Net Worth Plummets amid Scandal
Sam Bankman-Fried (SBF), Founder of the FTX cryptocurrency exchange, has seen billions wiped from his personal wealth after his fortunes nosedived 94 percent, Bloomberg’s Billionaires Index revealed on Wednesday.
According to the chart, the executive formerly had a net worth of $26 billion, but now no longer appears on the list following the liquidity collapse of FTX.
Bloomberg noted that SBF’s total net worth could potentially become “eviscerated” if he sells his trading platform to rival exchange Binance.
He also held a $6.2 billion stake in FTX, or 53 percent of the company’s total shares, along with ownership of Alameda Research worth $7.4 billion in additional personal wealth.
The Index also noted that SBF’s net worth will plummet from $15.6 billion to just $1 billion, marking the “biggest one-day collapse ever among billionaires tracked by Bloomberg.”
NOW: Bitcoin fell 13% to $16,216.08 on Wednesday after Binance reportedly backed out of its FTX buyout https://t.co/1rYyZHILES pic.twitter.com/rxeGoGSFPa
— Bloomberg Markets (@markets) November 9, 2022
The news comes after Binance entered takeover talks with FTX in a non-binding letter of intent this week, which the former could “pull out from […] at any time,” SBF said in a recent statement, with ongoing developments plunging FTX’s native token, FTT, 75 percent over the last 12 hours.
