Binance backtracks: gives up buying FTX and shakes the cryptocurrency market

Binance’s purchase of FTX will ultimately not happen. The world’s largest cryptocurrency exchange by volume has announced that abandons the rescue plans of its competitor Announced just over 24 hours ago. In this way, FTX is left in a complex situation to face a liquidity crisis.

“As a result of corporate due diligence, as well as recent news reports of mishandling of customer funds and alleged investigations by the US agency, we have decided that we will not pursue the potential acquisition of FTX,” he said. Binance in a statement this Wednesday afternoon, shaking up the crypto market.

Binance Pulls Out of Deal and Crypto Market Shakes

The exchange founded and run by Changpeng Zhao has stated that it was hoping to help FTX, however it has concluded that the problems are beyond your control or ability to help. The decision also comes after FTX acknowledged that it was unable to honor all withdrawals.

Before the announcement between Binance and FTX, the latter exchange saw its clients rush to withdraw their investments amid strong rumors of a liquidity crisis and several investigations by US regulators for possible mishandling of funds. Within 72 hours, about 6,000 million dollars vanished.

Details about how much Binance would have paid for FTX were not public, but private investors they had valued to the Sam Bankman-Fried cryptocurrency exchange at $32 billion. There are also no details of what Binance saw in the company’s accounting books to back out of the deal.

Nevertheless, Coindesk had noted earlier than, according to sources related to the subject, that the management of investments by FTX had raised concerns in Binance’s top management. In that sense, they assured that it would not be an unexpected move if Zhao decided to back down from the agreement. Finally, that has happened.

The consequences of the failed purchase have already begun to be felt. FTT, the FTX token, had already lost 80% of its value between Monday and Tuesday, translating into a value loss of 2 billion in one day. This Wednesday, after the announcement, the crash has been much worse. The token fell from 5 dollars to $2.30that is, almost half, reducing its circulation value to about 340 million dollars.

Other cryptocurrencies have also been affected. The price of Bitcoin is down 13% this Wednesday, trading slightly above $15,900. Ether, meanwhile, has plummeted 30% at the time of writing this article, dangerously close to falling below the psychological barrier of $1,000.

Images: Kanchanara | Binance | FTX

In Xataka: What is really behind .xyz, the domains that want to be the .com of the future and succeed among scammers and web3