Binance cancels deal to buy FTX

Changpeng Zhao, founder and CEO of Binance, said the crypto exchange major was looking to fully acquire its US-based peer FTX.

However, that deal is now off following due diligence and “latest news reports regarding mishandled customer funds and alleged US agency investigations,” the exchange announced.

Without an infusion of cash to cover its US$8 billion shortfall, bankruptcy is likely for the once-celebrated FTX. Cryptocurrency prices may also tumble further as the knock-on effects of this development spread.

Photo credit: MX Global

Also known as CZ, Zhao said in a tweet that Binance signed a non-binding letter of intent to buy out FTX, which was established by Sam Bankman-Fried in 2019.

“There is a lot to cover and will take some time. This is a highly dynamic situation, and we are assessing the situation in real time,” CZ wrote.

According to data from CoinMarketCap, FTX is currently the third-largest crypto exchange worldwide, registering almost US$5 billion in 24-hour trading volume. It sits below Binance and Coinbase, which rank first and second, respectively.

“I know that there have been rumors in media of conflict between our two exchanges, however Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators,” Bankman-Fried, who often goes by SBF, wrote in a tweet.

The development comes after a report from Coindesk said that most of the US$14.6 billion in assets of Alameda Research, SBF’s trading firm, were tied up in FTT – a token issued by FTX. This is as opposed to fiat currency or other independent tokens.

After the report came out, Binance said it will be selling off its remaining FTT tokens “due to recent revelations that have came to light.” These FTT tokens are what were left from Binance’s exit from FTX last year after being an early investor in the exchange.

FTT’s prices also fell roughly 70% from US$19.24 on November 9 to around US$5.8 as of time of writing.

See also: Hodlnaut founders hid financial documents, new Singapore court report says

Update (Nov. 10, 7:54 a.m. SGT): Added new development that Binance isn’t proceeding with the deal.