In a dramatic twist, Binance has confirmed that it is dropping FTX trading. This leaves troubled exchanges with no choice but to seek new buyers immediately or go bankrupt.
Binance is no longer considering an FTX acquisition
In a dramatic twist, cryptocurrency giant Binance has confirmed that it is dropping a bailout of its smaller rival FTX. The announcement came shortly after Binance CEO Changpeng Zhao issued a letter of intent to acquire the troubled company on Wednesday.
According to Binance, the acquisition was not completed due to multiple allegations surrounding the troubled exchange. These included claims of mishandling of FTX client funds, which led to regulatory investigations by the SEC and DOJ.
Binance tweeted: “Due to corporate due diligence, as well as recent news reports of mishandling of client funds and an investigation of an alleged US agency, we have decided not to pursue an acquisition of FTX.
Initially, the company aimed to support FTX clients by providing financial liquidity to the exchange. But given recent developments, Binance believes the issue is beyond its control or ability to help.
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
How did the Binance-FTX fiasco come about
It all started on Sunday, when Binance’s CEO first tweeted about his intention to sell the company’s FTT token holdings. While he didn’t specify any reason, CZ later revealed in a tweet that the move appeared to be aimed at “those who are lobbying behind the scenes against other industry players”.
Speculation then started, with many claiming that Binance’s massive coin dump was an attempt to cancel FTX. This is especially true after Sam Bankman-Fried, CEO of FTX, expressed strong support for the Digital Commodities Consumer Protection Act (DCCPA) encryption bill, which many believe could pose a significant threat to DeFi players.
While the real intention behind Binance’s move is anyone’s guess, the token sale caused a lot of FUD and caused a lot of damage to FTX. With one of the largest cryptocurrency companies on the verge of collapse, many are expecting tougher times ahead for cryptocurrencies.
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