NEW YORK: A deal for major cryptocurrency exchange FTX collapsed on Wednesday (Nov 9) as bigger rival Binance said it was pulling out after doing due diligence on the proposed acquisition.
Binance signed a non-binding agreement on Tuesday to buy FTX’s non-US unit to help cover a “liquidity crunch” at the rival exchange, but the deal was subject to further due diligence.
“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 said in a statement.
A representative for FTX did not immediately respond to a request for comment, but CEO Sam Bankman-Fried told employees in a Slack message viewed by Reuters that Binance had not previously expressed reservations about the deal.
Bankman-Fried told investors on Wednesday that the cryptocurrency exchange needs an emergency funding to cover a shortfall of up to US$8 billion (RM37.4 billion) due to withdrawal requests received in recent days, The Wall Street Journal reported, citing people familiar with the matter.
The turmoil over FTX has hit crypto prices. Bitcoin, the biggest cryptocurrency by market value, was last down 13% on the day at US$16,277.
FTX.com is also facing scrutiny from US regulators over its handling of customer funds, as well as its crypto-lending activities. – Reuters