Binance tweeted Wednesday afternoon that it will not proceed with the acquisition of competing exchange FTX.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said.
Retail investors are left to worry if they will be able to access currency held by FTX once the exchange experienced severe liquidity problems earlier this week. Worrisome connections between FTX, its native token FTT, and Alameda, a research and trading company also controlled by FTX head Sam Bankman-Fried, were disclosed in a CoinDesk piece, which is likely what caused the uproar.
The bailout inspired confidence in the sector. However, CZ made it plain right away that Binance had the right to cancel the agreement “at any time.” Binance has formally opted not to acquire FTX after evaluating FTX’s financial state. Furthermore, Binance brought up recent rumors about US investigations into FTX regarding mismanaged consumer cash and loans.
It appears, Binance backing out of the deal has caused great turbulence in the Cryptocurrency market. Prices have fallen, with bitcoin plummeting 15% on Wednesday after falling by 13% on Tuesday. For the first time since November 2020, it is currently trading below $16,000. Ethereum, on the other hand, has dropped more than 30% in the last two days and is on the verge of going below $1,000.
Here’s the company’s full statement:
“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, our hope was 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. 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.
As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”