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.