Binance, the world’s largest crypto exchange, has backed out of its agreement to purchase FTX just one day after signing an agreement to rescue the company on Tuesday.
Binance said its decision was made in light of a review of FTX’s handling of customer deposits, alongside alleged US agency investigations against the firm.
- The announcement, made on Wednesday, claimed that FTX’s financial position was beyond help – even from Binance.
- “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, said the exchange.
- Binance noted that retail customers suffer “every time a major player in the industry fails.” However, it stated that such bad actors that misuse customer funds will eventually 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,” it concluded.
- Coinbase CEO Brian Armstrong provided similar comments on Tuesday, believing that clearer U.S. regulation will help protect customers from seeking less protected offshore exchanges in the future.
- FTX experienced overwhelming withdrawal demand starting on Monday, which concluded with the firm freezing user withdrawals the following day.
- Binance CEO Changpeng Zhao (CZ) confirmed afterward that Binance had signed a non-binding agreement to purchase FTX and help it navigate its liquidity crunch. However, he clarified from the start that Binance reserved the right to withdraw from the agreement at any time.
- CZ denied that he orchestrated the downfall of FTX in any way, calling it “not good for anyone in the industry.”
- Bitcoin fell over 11% on Wednesday down to a yearly low of just $16,100.