"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," says Binance in a series of tweets.
Binance says it will not go ahead with plans to buy FTX,
citing the results of due diligence and reports of US regulatory
investigations into its rival crypto exchange.
"
The
u-turn comes a day after Binance and FTX agreed the takeover, although
both stressed that this was predicated on a full due diligence process.
Since
then, Bloomberg has reported that the Securities and Exchange
Commission and the Commodity Futures Trading Commission have been
investigating FTX’s relationship with FTX US as well as sister entity
Alameda Research for months.
Alameda Research is the crypto
trading firm run by FTX chief Sam Bankman-Fried. Last week, CoinDesk
reported on a leaked balance sheet showing that FTX's FTT native token
made up about a quarter of Alameda's assets.
That revelation helped spark the liquidity crunch at FTX, with Binance saying it would dump its holdings of the token.
With
FTX facing a surge in withdrawals over recent days, raising concerns
about its ability to survive, Bankman-Fried approached rival Changpeng
Zhaoa bout a possible deal.
However, within hours of that process
beginning, Binance found a financial back hole, according to Bloomberg,
citing a source suggesting a gap between liabilities and assets at FTX
that could top $6 billion.
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