Leading cryptocurrency exchange Binance has pulled out of its supposed deal to acquire the FTX exchange after conducting due diligence. Binance Chief Executive Officer (CEO) Changpeng Zhao or CZ released a tweet thread to announce the decision of his firm. CZ quoted mishandled customers’ funds and the result of the due diligence as some of the reasons behind its decision.
“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,” CZ tweeted “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.”
At the beginning of this year, FTX was valued at $32 billion but is now battling with insolvency. This decision taken by Binance leaves Sam Bankman-Fried FTX on the verge of collapse.
FTX CEO Says Binance Showed No Reservations
On November 8th, Binance signed a non-binding agreement with FTX to acquire its non-United States unit to mitigate liquidity crunch. The value of the acquisition was not disclosed neither were the terms of agreement disclosed to the public. Rather, the deal was relegated to go through corporate due diligence before a final binding agreement is made and signed.
For FTX, the news of Binance withdrawal comes as a surprise because Binance showed no reservations, nor were they hesitant at the initial stage of the acquisition. FTX CEO, Sam Bankman-Fried reiterated this thought in a Slack message which was sent to the exchanges employees.
“We obviously just saw Binance’s statement. They relayed that to the media first, not to us, and had not previously informed us or expressed those reservations,” SBF continued “I’ll keep fighting for those, as best as I can, as long as it’s correct for me to. I’m exploring all the options.”
With the news of Binance pulling out, the FTX token (FTT) has plummeted 48% leaving the tokens value at $2.25. Before this time, FTX was on a purchasing spree trying to salvage what was left of firms like BlockFI. This devastating news leaves FTX stranded while it waits for who might be interested in acquiring it non-U.S business.