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Binance pulls out of deal to buy FTX

Binance is pulling out of its non-legal agreement to buy FTX crypto exchange and rescue it from its financial peril. As things stand, the Sam Bankman-Fried-owned company is on its last legs.

Just a day before, Changpeng Zhao had announced interest in buying its rival after weeks of public spat between him and Bankman-Fried. Then, after threatening to pull Binance’s investments in FTX out, Zhao made a shocking turn around to buy it and help it with its liquidity problems.

However, at the time that the agreement was revealed, it was made clear that it was not legally binding. Binance still had a way out if their checks turn out unpleasant truths, and it seems that it did.

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“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,” Zhao had explained.

He added that there were issues of mishandled customer funds and investigations by US agencies which made it unwise to go ahead with the acquisition.

CNBC reported that FTX has a backlog of withdrawals worth about $8 billion and it needs help clearing those out urgently. With the company’s CEO deleting previous tweets where he claimed that it had enough assets to cover client’s holdings, it shows that it is really in the thick of things.

While some were praising Zhao for being responsible for the fall of FTX, the crypto billionaire has a totally different look at things. He says that the situation is not good for anyone in the industry.

Since FTX’s news broke, Bitcoin price has dropped to $16,000 (its lowest point since November 2020) and Ether has dropped by 30% to $1,000.

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Onwuasoanya Obinna

A reader of books and stringer of words. Passionate about Science and Tech. When not writing or reading he is surfing the web and Tweeting.