FTX, the world’s fourth largest cryptocurrency exchange, is seemingly kaput.
Binance, the leading global crypto exchange, announced on Wednesday that it had decided to not acquire FTX after a due diligence investigation.
“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,” Binance announced on its Twitter account. “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.”
FTX was founded by Sam Bankman-Fried, or SBF, an industry leader who had become known for swooping in to bail out failing crypto companies. Now, it seems no one in the industry wants to bail him out.
The latest news that Binance mentions in its statement is in reference to a Bloomberg report from earlier in the day which says that the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are currently investigating SBF’s companies FTX and Alameda for mishandling customer funds.
Changpeng Zhao, the founder of Binance, initially announced on Tuesday that the company entered a non-binding agreement with FTX after speaking with its founder, Sam Bankman-Fried. Reports have been circulating for days regarding the liquidity of SBF’s crypto empire after internal balance sheets leaked.
Things very quickly began to fall apart as Changpeng Zhao, or CZ for short, announced it was selling off any of its holdings of FTX’s crypto token, FTT. As news continued to spread, FTX ended up experiencing $6 billion in customer withdrawals within a 72 hour period.
Before backing out of the acquisition, CZ publicly shared a memo he sent to Binance employees explaining how the company had not planned for its competitor’s collapse and that FTX’s failure is not actually good for the crypto industry as a whole.
“Sad day, tried but…” CZ tweeted, adding in a crying face emoji.
FTX was in talks to raise $1 billion at a $32 billion valuation just six weeks ago. As of Wednesday, FTX’s website, FTX.com was experiencing outages.
“Something went wrong,” read a prompt on the website when it was down.