The cryptocurrency and other cryptographic assets (NFT) exchange Binance has backtracked on its intention to acquire FTX, whose liquidity needs would be around 8 billion dollars (similar figure in euros), after the analysis of its accounts and in view of the potential investigations by the US authorities, thus leaving its rival on the verge of collapse.
«As a result of corporate due diligence, as well as recent news reports about the mishandling of customer funds and alleged investigations by U.S. agencies, we have decided that we will not pursue the possible acquisition of FTX.com,» Binance confirmed just days after announcing a deal to buy the platform.
In a terse message via his Twitter profile, Binance CEO Changpeng Zhao lamented the failure of the transaction. «It’s a sad day. We tried, but…,» the executive stated.
In this regard, Binance has explained that while it had initially hoped to be able to help FTX customers provide liquidity, it has ultimately acknowledged that the problems are beyond its control or ability to help.
«Every time a major player in an industry fails, retail consumers will suffer,» has lamented the platform, which, however, has felt that the crypto ecosystem is becoming more resilient.
«As regulatory frameworks develop and the industry continues to evolve towards greater decentralization, the ecosystem will become stronger,» it has stressed.
Last Tuesday, the largest crypto trading platform announced its intention to come to the aid of FTX in the face of the platform’s liquidity problems, although Changpeng Zhao warned at the time that the transaction had yet to pass the due diligence process and that Binance could withdraw from the deal at any time.
A GAP OF $8 BILLION In a conference with investors prior to Binance’s withdrawal, FTX CEO Sam Bankman-Fried reportedly put the platform’s hole at about $8 billion (a similar figure in euros), including the need for about $4 billion for the firm to maintain its solvency, according to sources familiar with the matter told Bloomberg.
Separately, US regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating whether FTX properly handled customer funds, as well as its relationship with other parts of the Bankman-Fried ‘crypto-empire’, while Justice Department officials would also be working with SEC lawyers, according to the agency.
FTX has a prominent list of backers including Sequoia Capital, BlackRock, Tiger Global Management and SoftBank Group.
In this regard, the firm Sequoia Capital has communicated that it has reduced the value of its position in the ‘crypto’ exchange platform to zero, stressing that its exposure to FTX «is limited».
«We are in the business of taking risks. Some investments will surprise to the upside and some to the downside (…) At the time we invested in FTX we performed rigorous due diligence,» the firm said.
In this context, the FTX token (FTT), the cryptocurrency of the ‘exchange’, has deepened its decline with a fall of 38.8%, to stand at $ 2.64. On Tuesday, the digital currency had already recorded a steep decline in its trading, which took it from being worth $22.05 to $4.23 in less than 24 hours.
In September 2021, during the cryptocurrencies’ most bullish moment, FTT traded as high as $80.49, so it has since plummeted 96.7%.
