Binance has abandoned plans to purchase FTX, despite being partly to blame for its rival’s woes.
FTX’s value has plummeted and sparked liquidity concerns following a CoinDesk report revealing that much of Alameda Research’s value was based on illiquid tokens, such as FTX’s FTT. Both companies were founded by FTX CEO Sam Bankman-Fried. Following the revelation, Binance CEO Changpeng “CZ” Zhao announced he would divest his FTT holdings, driving FTX down even more.
Despite initially striking a deal to purchase FTX, Binance has reversed course, deciding the deal is untenable.
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” a Binance spokesperson told CoinDesk.
“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. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.
“As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger,” the spokesperson added.