Binance isn’t buying FTX after all. The crypto giant said Wednesday it has decided that it “will not pursue the potential acquisition” based on a “corporate due diligence” review.
The company cited recent reports that FTX allegedly “mishandled customer funds” and that the company is under investigation by U.S. regulators.
Binance said it had hoped “to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
The reversal caps a tumultuous week in crypto which began with reports raising questions about FTX’s finances. That triggered Binance’s decision to liquidate its holdings in FTX’s native FTT token, which led first to a war of words between Binance CEO Changpeng "CZ" Zhao and FTX's Sam Bankman-Fried; to a further selloff in FTT and a move by FTX to stop customer fund withdrawals; and finally an announcement Tuesday that the two crypto powerhouses had tentatively agreed to merge.
Zhao had said his company had signed a “nonbinding” agreement, noting that they had the “the discretion to pull out from the deal at any time.”
Far from reassuring the market, the uncertainty surrounding FTX’s future triggered a broader crypto market selloff. Bitcoin fell below $16,000, erasing recent gains since the start of crypto winter.
“Every time a major player in an industry fails, retail consumers will suffer,” Binance also said. “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.”
FTX could not immediately be reached for comment.