Binance Abandons FTX Deal, Citing Mishandled User Funds and US Probe

Binance Abandons FTX Deal, Citing Mishandled User Funds and US Probe

Binance announced Wednesday that it would no longer pursue an acquisition of FTX, leaving the crypto empire of Sam Bankman-Fried on the brink of collapse.

The decision to reverse course came just one day after Binance CEO Changpeng Zhao confirmed that the world’s largest cryptocurrency exchange had managed to reach a non-binding agreement to buy all of FTX’s overseas operations for an undisclosed sum, thus saving the company from a liquidity crunch. Private investors placed a $32 billion valuation on FTX earlier this year. In a Twitter statement, Binance said:

"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 issued a statement saying it was backing out of the deal after discovering “mishandled customer funds” during its audit of FTX’s books and hearing that FTX would be investigated by U.S. regulatory agencies.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are reportedly probing into possible financial mishandling on the part of the FTX exchange, as well as the exchange’s affiliations with FTX US and Alameda Research.

What Next for SBF and FTX?

Currently, the future of the company and its 30-year-old CEO, Sam Bankman-Fried, who became the second-largest Democratic donor in the country this election season, remains uncertain.

Uncertainty shrouds the prospective buyer of the struggling cryptocurrency exchange. Bankman-Fried reportedly notified investors that the company faces a deficit of up to $8 billion, owing to withdrawal demands, and needs immediate cash.

According to a Semafor reportas soon as FTX announced its now collapsed acquisition deal with Binance, the majority of its legal and compliance staff quit. The report quotes people with knowledge of the situation who opine about the company’s obstacles to concluding any prospective deal in the absence of legal counsel.

Without a rescue plan, SBF’s crypto empire, including FTX, is about to implode. Changpeng Zhao, the founder and CEO of Binance, stated in an internal note that he shared with the public on Twitter on Wednesday that the dramatic collapse of a top crypto exchange in FTX is “not good for anyone,” and will only increase regulatory scrutiny and make it more difficult to obtain licenses globally.

Compiled by Metacrunch. Metacrunch is a news complier and aggregator platform which aims to spread awareness and updates on Metaverse, Web 3.0 Technology, Blockchain, Cryptocurrency, NFTs, Airdrops and many more.

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