Binance backs out of FTX acquisition

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Updated November 10, 2022 | Published November 10, 2022

2 mins read

FTX has been left in jeopardy as CEO Sam Bankman-Fried attempts to salvage his company.

Cryptocurrency exchange Binance has backed out of its plans to acquire rival exchange FTX.

The decision to back out of the acquisition has FTX CEO Sam Bankman-Fried’s company on the brink of collapse.

Binance recently signed a Letter of Intent (LOI) agreeing to buy out FTX in principle. However, the documentation has reportedly been scrapped and the acquisition abandoned.

The reversal comes shortly after Binance CEO Changpeng Zhao took to Twitter to announce that FTX was asking for help.

“There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire [FTX] and help cover the liquidity crunch. We will be conducting a full DD in the coming days”, he wrote.

However, a day later a tweet was posted stating “Sad day. Tried”.

The quick turnaround followed an announcement from Binance on Wednesday, November 9, citing reports of “mishandled customer funds and alleged US agency investigations”, followed by its plans to back out of the deal.

Consequently, cryptocurrency prices plummeted. Bitcoin (BTC) dropped by more than 13% to a two-year low of $15,840 after Binance confirmed rumors of the pull-out, and Ethereum (ETH) fell by 13% respectively.

FTX’s native crypto token FTT also lost more than half its value.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com”, a spokeswoman for Binance said.

“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. Every time a major player in an industry fails, retail consumers will suffer”.

Looking for your next crypto casino? Check out: Bitcasino, Gamb.co or FortuneJack.

Written by Isabella Aslam

Reporter

Isabella is an experienced writer in B2B and B2C journalism. Alongside crypto, Isabella writes and discusses the topics of relationships and psychology. Isabella holds a first-class degree in music journalism and often interviews electronic artists and DJs.
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