Binance Backs Out of FTX Deal
- Binance CEO Changpeng Zhao claims he had little knowledge of the internal state of things at FTX when an agreement was reached.
- CZ urged Binance users not to view FTX’s decline as a win but instead to expect things to get tougher for exchanges.
- Crypto users are concerned that a platform as large as FTX could easily collapse, bringing renewed fears to the industry.
- Regulators are expected to increase their scrutiny of crypto businesses following several high-profile failures.
Cryptocurrency exchange, Binance has shockingly backed out of the deal to acquire its embattled counterpart, FTX, 24 hours after it was first announced. The Wall Street Journal first reported the news, and Binance walked out of the deal after reviewing FTX’s books and structure. The company said in a statement,
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.
Changpeng Zhao, the CEO of Binance, announced the deal on Tuesday but cautioned that it would not go through until the due diligence process was done. In a letter sent to employees, CZ emphasized that the acquisition had not yet been completed. He advised Binance staff members not to trade FTT during this time. CZ also advised employees not to comment on the deal publicly or privately, adding that “if you are not directly involved, don’t ask.”
CZ shared a screenshot of the message sent to Binance employees on Twitter, noting that he was surprised when SBF decided to call. The Binance boss claimed that the deal happened too quickly and that he had little idea of the internal state of things at FTX.
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],” Binance wrote in a tweet.
Sources with knowledge of the situation recently revealed that Binance’s executive team was concerned about FTX’s loan agreements. CZ had earlier tweeted that FTX “going down is not good for anyone in the industry.”
Zhao urged users not to view FTX’s decline as a win for the platform, noting that user confidence is severely shaken. According to the 45-year-old billionaire, FTX’s decline will attract more scrutiny from regulators, making it difficult for crypto firms to get licenses worldwide.
With Binance clearly the biggest exchange, CZ expects more attacks but is ready to be transparent.