Binance Pulls Out of Acquisition Deal, FTX Reportedly in Need of $8B

  • Shortly after completing its due diligence process, Binance announced it will no longer pursue the acquisition of FTX, and that the issues were beyond its ability to help.
  • Unnamed sourced told Bloomberg on Wednesday that FTX needed $8 billion in emergency funding, without which it could be forced to file for bankruptcy.

Binance CEO Changpeng Zhao. CoinDesk

Cryptocurrency exchange Binance has abandoned its plans to acquire rival FTX after completing the due diligence process, noting that the issues were beyond its “ability to help”, the company said via Twitter on 9 November.

According to the announcement, the decision to no longer “pursue the potential acquisition” of FTX was made after Binance completed its corporate due diligence process, which revealed that FTX’s issues were beyond it’s “control or ability to help”. Binance also noted that recent reports of FTX mishandling customer funds and a potential U.S. probe into the exchange also played a part in its decision to scrap the deal.

The “alleged US agency investigations” is likely a reference to a Bloomberg report from yesterday, which claimed that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) were investigating whether FTX had mishandled its customer funds, and what was its connection to the other Sam Bankman-Fried-owned businesses, FTX.US and Alameda Research. Reuters cited “people familiar with the matter” earlier today, who said SBF had used customer funds back in May to prop up Alameda Research.

Not long after Binance’s announcement, FTX’s website went down for a couple of hours, and then returned with a banner warning users that the exchange was unable to process withdrawals and that they should avoid depositing funds on the platform. Bloomberg later reported that SBF told investors in a call on Wednesday that the exchange would need $8 billion in emergency funding, without which it might need to file for bankruptcy.

Shortly after Binance scrapped the acquisition of FTX, Tron founder Justin Sun announced on Twitter that he and his team were working on a solution to “initiate a pathway forward” for the troubled exchange. Although he did not provide much information, FTX resumed withdrawals for some Tron-based tokens — including TRX, JST, SUN, HT, and BTT — shortly after.

Related Coverage
BlockFi Files for Bankruptcy Following FTX Collapse
  • BlockFi’s Chapter 11 filing revealed that it had $257 million in cash on hand, more than 100,000 creditors, and between $1 billion and $10 billion in both assets and liabilities.
  • The company’s largest creditors include FTX.US, which has a $275 million unsecured claim, and the Securities and Exchange Commission with a $30 million claim
a day ago
BlockFi CEO Zac Prince

BlockFi CEO Zac Prince. CoinDesk

Binance Launches Merkle Tree-Based Proof-of-Reserves System
  • Binance’s new proof-of-reserve system shows it has Bitcoin (BTC) balance of 582,485 tokens, while users have a net balance of 575,742 BTC.
  • The exchange also plans to involve a third-party auditor to verify its PoR system, as well as implement ZK-SNARKs to improve privacy.
Binance Launches $1B Industry Recovery Initiative With 7 Contributors
  • Binance has officially launched its $1 billion industry recovery fund, and said it is ready to set aside another $1 billion in the near future “if the need arises”.
  • Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group have all joined the fund with a combined contribution of $50 million.