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Binance deal for FTX collapses | Business and Economy News

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Binance pulled out of the deal following corporate due diligence and reports of mishandling of funds.

Major crypto exchange FTX’s deal collapsed, while bigger rival Binance said it would pull out after conducting due diligence on its proposed acquisition.

Binance on Tuesday signed a non-binding agreement to buy non-U.S. units of FTX to cover a “liquidity crisis” at a competing exchange, though the deal will require further due diligence. I needed it.

In a statement on Wednesday, Binance said, “Following the results of our corporate due diligence and our latest news report regarding alleged mishandling of customer funds and an investigation into a US agency, we have decided to close the potential acquisition of FTX.com. I have decided not to pursue it.” .

A representative for FTX did not immediately respond to a request for comment, but CEO Sam Bankman-Fried told employees in a Slack message seen by Reuters that Binance had previously expressed reservations about the deal. He said he didn’t.

“Obviously, we just saw a statement from Binance,” Bankman-Fried said in a message. “They told the media first, but they didn’t tell us.

“As long as it’s right for me, I will continue to fight for them the best I can. I am considering all options.”

Bankman-Fried told investors on Wednesday that the cryptocurrency exchange needed emergency funding to cover a shortfall of up to $8 billion due to recent withdrawal requests, The Wall Street Journal reports. reported, citing people familiar with the The exit was triggered by speculation about FTX’s financial health.

crypto hit

The turmoil surrounding FTX has taken a toll on cryptocurrency prices. Bitcoin, the largest cryptocurrency by market value, fell 13% to $16,277, down more than 60% for the year.

Binance CEO Changpeng Zhao in the early hours of Wednesday murmured Neither was it a win, nor was the letter to staff stating that there was no ‘master plan’ behind the deal, and that ‘FTX’s decline was not good for anyone in the industry.’

Zhao also urged investors not to trade FTT tokens and ignore the price.

Binance was not the only possible partner sought. Ahead of Binance’s proposed trade, Bankman-Fried approached cryptocurrency exchange OKX on Monday morning, but the exchange refused to go forward.

FTX.com also faces scrutiny from U.S. regulators over its handling of customer funds and cryptocurrency lending activities.

Cryptocurrencies have been devastated this year as investors retreat from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to $1.7 trillion.

The latest development is a significant reversal of fortunes for Bankman-Fried, which established itself as the savior of the industry earlier this year by rescuing a rival that got into trouble.

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