Crypto exchange Binance abandons rescue of FTX one day after announcing takeover bid

Dado Ruvic / reuters

FTX won’t be rescued by its biggest rival. One day after announcing a proposed deal to buy the cryptocurrency exchange, Binance said it didn’t like what it found in the company’s books. “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,” Binance tweeted on Wednesday afternoon. “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.”

The abandoned takeover bid caps off a tumultuous week for FTX. On November 2nd, Coinbase published a report that revealed that the cryptocurrency exchange was facing a liquidity crisis. In response to the article, Binance CEO Changpeng Zhao announced that the company would sell about $529 million worth of FTX’s FTT token, a move that wiped out the value of the cryptocurrency and launched a public spat between the competing exchanges.

Even when the acquisition was first announced, the likelihood of it moving forward seemed uncertain at best, with Zhao stressing at the time that the deal was non-binding. “This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.” he said on Tuesday. By the following morning, The Wall Street Journal and Coinbase came out with separate reports claiming Binance was strongly leaning toward abandoning the rescue.

Less than an hour later, Bloomberg reported that the US Securities and Exchange Commission was investigating FTX to determine if the company had mishandled customer funds. It’s worth noting here that the Department of Justice and SEC are also investigating Binance.