Binance announces they will not proceed with FTX’s acquisition.
Following due diligence, Binance affirmed that it would not pursue the acquisition of FTX after initially stating it would assist the exchange.
Another significant market disruptor in a sector that is becoming more unstable is the about-face. Concerns about the financial viability of numerous businesses, whose digital assets have seen a significant decline in value in recent months, have led to the merger of two of the largest crypto platforms in the world.
“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 explains
The turnaround casts doubt on the future of FTX, which was previously among the most well-known and valuable businesses in the cryptocurrency sector. According to CNBC, the company had a $32 billion private valuation early this year and may potentially be in financial trouble.
FTX or the Securities and Exchange Commission did not immediately answer inquiries about the transaction or the alleged probe.
Binance Statement on FTX
“We have decided not to pursue the potential acquisition of FTX.com in light of our corporate due diligence as well as the most recent news reports involving the mismanagement of client monies and suspected US government investigations.
Our initial intention was to be able to assist FTX’s clients in providing liquidity. However, the problems are outside of our control or realm of influence.
Each time a crucial business in a given sector fails, retail customers will suffer. Over the past few years, the cryptocurrency ecosystem has become more resilient, and we believe that, eventually, the free market will weed out anomalies that misappropriate user funds.
As governing structures are created, and the sector moves forward toward greater decentralization, the ecosystem will become more robust.”
What Next For Binance?
Many people had conjectured that the Binance acquisition might have been a part of a larger play from the company after Zhao announced Binance’s intention to liquidate its remaining FTX token holdings a few days prior. Zhao, however, made an effort to allay these worries in a note distributed to Binance staff on November 9 by claiming that any potential selloff by Binance was planned before any communications between Binance and
FTX appears to be on hold as of this writing.
The future viability of the FTX ecosystem is unclear at this point because Binance and FTX are ending their brief partnership. Although some users purportedly housed and subsequently lost their entire net worth on the platform, the displeasure of its customer base has grown palpable.
And it’s not just users who have been discouraged by FTX; according to the aforementioned Wall Street Journal report, Binance was astounded by the significant financial gap discovered in FTX during DD
“In the beginning, we hoped to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance explains in a Tweet.
Although Binance didn’t go into detail about the difficulties it faced, news organizations like Reuters have drawn attention to the fact that Bankman-Fried attempted to support FTX trading affiliate Alameda Research with billions of dollars from the now-bankrupt exchange, likely including customer assets. Court cases, regulatory inquiries, and potentially even a more ferocious crackdown on NFTs and cryptocurrency, similar to what we saw with the recent Bored Apes investigation, are all likely to result from this improper handling of cash.
Two Africans now serve on Binance’s Global Advisory Board
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