The world’s largest cryptocurrency exchange, Binance, has reversed its decision to acquire the floundering cryptocurrency exchange FTX.COM.
This comes just 24 hours after Binance announced a deal to acquire its rival. It previously hinted that it could still pull out of the deal pending due diligence, a decision that has now been made.
The company’s decision to withdraw was all but confirmed on Wednesday when they claimed the issues impeding the FTC acquisition were beyond their control.
What Binance is saying
Binance stated that the decision to withdraw from the deal was based on corporate due diligence and information that regulators were looking into issues of mishandling of investor funds.
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.com.
In the beginning, we hoped to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
Every time a major player in an industry fails, retail consumers will suffer. Over the last several years, we have seen that the crypto ecosystem is becoming more resilient, and we believe in time that the free market will weed out outliers that misuse user funds.
As regulatory frameworks are developed, the ecosystem will grow stronger as the industry continues to evolve toward greater decentralization.
What this means
This U-turn marks another major event in the decade-long story of cryptocurrencies and their knack for creating and eroding value.
- Just yesterday, CZ, the founder of Binance, suggested that the decision to acquire FTX was necessary for confidence in the cryptocurrency market.
- He also said the decision was to help protect users and help cover the liquidity crunch” if FTX was to go bust.
- Pulling out implies FTX might be headed towards bankruptcy and could take down the entire cryptocurrency market with it.
Bloodbath
Bitcoin prices fell 15% to $15.7k on Wednesday as investors liquidated millions of tokens in investments.
- The bloodbath may just have started, and the fear is that it could spread beyond cryptocurrency.
- Ether, Binance coin and other altcoins all fell as fear gripped the entire world of crypto.
- Just to add that media outlets are reporting that FTX has a shortfall of about $8 billion and could be facing bankruptcy.
Be prepared
There could be a global contagion from the collapse of FTX.COM, and this could spread beyond cryptocurrency to the mainstream debt market.
- Investors are already concerned about which global banks might be exposed to FTX, directly and indirectly.
- Stay alert.
