Binance Rejects Acquisition of FTX as Rescue Mission Falls Apart

Binance has withdrawn a proposal to acquire cryptocurrency exchange FTX, which is in the midst of a major liquidity crisis, because the latter is under investigation by several regulators, according to a tweet.

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 https://t.co/FQ3MIG381f.

— Binance (@binance) November 9, 2022

Binance made the disclosure barely 48 hours after it had initially expressed intent to cover-up FTX liquidity crunch. 

CZ explained that Binance would no longer pursue the acquisition of FTX exchange given the positions of the US regulators on the mismanagement of customers’ funds and the subsequent prosecution that might follow.

It was gathered that the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFC) are currently investigating FTX. 

While Binance asserted its interest and readiness to assist FTX exchange, it expressly stated that the issue was beyond its control.

Sad day. Tried, but 😭

— CZ 🔶 Binance (@cz_binance) November 9, 2022

However, Binance established that retail customers will be among the victims of circumstance for every step taken by a major player in the crypto space. Nevertheless, CZ opined that the crypto ecosystem is gradually developing as potential misuse of customers’ funds will be eroded.

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.

— Binance (@binance) November 9, 2022

FTX.com On a Brink of Collapse

While FTX centralized exchange is still running helter skelter with a view to finding an escape route to its liquidity crunch, it appears there is no hope in sight following Binance rejection bid.

In the same vein, the exchange informed users that it is still unable to process withdrawals.

The exchange CEO Sam Bankman-Fried subsequently informed investors that the exchange needed $8 billion as emergency fund to address the withdrawal backlogs and hoping to raise $3billion & $ 4billion respectively.