FTX: Cryptocurrency juggernaut Binance rejects a bailout.



The largest cryptocurrency exchange in the world, Binance, has abandoned a plan to help its smaller rival FTX.

According to Binance, the purchase will not be pursued after due diligence.It claimed that information about “mismanaged customer funds and purported US agency investigations” had influenced its choice.

A “liquidity crunch” brought on by a spike in withdrawals had FTX in trouble.

Withdrawals of $6 billion (£5.2 billion) were reportedly sparked in just three days by worries about FTX’s financial stability.

The Reuters news agency reported on Wednesday that the US Securities and Exchange Commission (SEC) was investigating FTX’s handling of customer funds and its crypto-lending activities.

The markets regulator was examining whether the platform had followed securities laws about keeping customer assets separate and whether it had traded against customers.

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.”


The exchange added that “as regulatory frameworks are developed and as the industry continues to evolve toward greater decentralisation, the ecosystem will grow stronger”.


FTX’s founder Sam Bankman-Fried and Binance’s chief executive Changpeng “CZ” Zhao are two of the most powerful people in the cryptocurrency market and high-profile rivals.

A notice on its website said: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”

The pressure on FTX came in part from Mr Zhao, who had tweeted on Sunday that Binance would sell its holdings of FTX’s digital token, known as FTT. The token has lost around 90% of its value this week.

Binance stepped in on Tuesday, saying it had signed a letter of intent to buy FTX’s non-US unit. But it added it had “the discretion to pull out from the deal at any time”.


Mr Zhao tweeted on Wednesday: “Sad day. Tried, but [crying emoji]”.


Bitcoin dropped below $16,000 after Binance pulled out of the deal before regaining some ground, while shares in cryptocurrency exchange Coinbase fell by more than 9.5%.



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