Binance Backs Out of FTX Deal Over Reports of Mishandled Customer Funds
Binance, the largest cryptocurrency exchange in the world, opted not to acquire rival crypto exchange FTX due to concerns about the mishandling of customer funds and alleged investigations by the U.S. government.
Binance showed signs of providing a bailout deal to its struggling competitor, FTX, despite its liquidity crunch, after signing a letter of intent. Binance, though, backed out of that plan.
As reported by The Wall Street Journal, Binance said, “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.”
In a tweet, Binance said, “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of [FTX].”
In addition, Binance noted that retail investors suffer every time a major crypto business fails. They also commented that they wanted to help FTX's customers, but they could not. The crypto ecosystem has become more resilient over the last few years, and Binance believes that the free market will eventually eliminate outliers from the market.
The crypto market cap has fallen by 11% to $906 billion. Bitcoin has dropped to $17,500, its 2-year low. The Binance-FTX saga has only added to the volatility of crypto prices. Several factors will influence the outcome in 2022, such as regulators' approach and institutional adoption.
CBW - External Analyst