Binance Exits Deal to Purchase FTX

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 10, 2022 5:18 PM

    Updated on January 9, 2023 12:50 PM

    Adding to the tension, the SEC and other authorities have increased their investigation of the business as worries about how cryptocurrency platforms are trading rise.
    Binance Exits Deal to Purchase FTX
    Source: Forbes

    Binance withdraws FTX deal

    According to persons familiar with the situation, cryptocurrency exchange Binance changed course on a rescue plan for FTX on Wednesday, leaving the major digital corporation with an unclear future as it confronts a shortfall of up to $8 billion.

    Binance, the world's largest cryptocurrency trading platform, announced Wednesday that it withdrew from a plan to acquire rival exchange FTX. The news comes just one day after Binance announced its intention to buy FTX in response to an increase in user withdrawals.

    Other digital tokens declined in value when Binance withdrew its offer to purchase FTX, citing due diligence issues.

    Some FTX clients have been unable to withdraw funds from the exchange used to purchase and trade various digital currencies.

    There are also concerns about more crypto market volatility if FTX fails.

    The market goes down

    Bitcoin plummeted below $16,000 for the first time since 2020 on Thursday, as the news shook investor confidence.

    Ethereum, another prominent digital coin, fell before recovering.

    Binance signed a letter of intent to buy a struggling competitor, FTX, on Tuesday, in what looked to be a potential rescue of the latter amid a liquidity crisis. But that strategy fell apart just over 24 hours later.

    Binance withdrew after examining the company's structure and books. "Our objective was to be able to assist FTX's clients in providing liquidity, however, the challenges are beyond our control or capacity to assist," Binance explained.

    SBF goes all out on Twitter

    In a series of 22 Tweets, SBF has explained all his parts. The issue, the breakdown, the mistakes he made as a CEO, and how this impacted his and the company's reputation altogether, SBF's outbursts on the microblogging site. He even apologized to everyone who faced significant losses during the feud.

    "Because at the end of the day, I was CEO, which means that *I* was responsible for ensuring that things went well. *I*ultimately, I should have been on top of everything. I failed in that. I'm sorry." - SBF stated in a Tweet.

    Zhao tweeted shortly after Binance said it was suspending the deal, "Sad day. Tried, But [crying emoji]" Earlier in the day, while the transaction was still in the works, he sent an email to his colleagues in which he said

    "FTX going down is not good for anyone in the industry. User confidence is severely shaken. Regulators will scrutinize exchanges even more. Licenses around the globe will be harder to get."

    Firms going short on FTX

    Along with Bitcoin, shares of cryptocurrency exchange Coinbase plunged by more than 9.5% due to the announcement.

    The company is on the brink of being Bankswept. Even worse, companies and firms investing in FTX are withdrawing their funds from FTX, making the liquidity crunch more intense.

    Meanwhile, Sequoia Capital has announced that it would write down its more than $210 million investment in FTX, citing the cryptocurrency exchange's imminent insolvency.