{"id":501,"date":"2022-11-09T21:05:41","date_gmt":"2022-11-09T21:05:41","guid":{"rendered":"https:\/\/nft.runfyers.com\/index.php\/2022\/11\/09\/binance-says-it-will-not-acquire-ftx\/"},"modified":"2022-11-09T21:05:41","modified_gmt":"2022-11-09T21:05:41","slug":"binance-says-it-will-not-acquire-ftx","status":"publish","type":"post","link":"https:\/\/nft.runfyers.com\/index.php\/2022\/11\/09\/binance-says-it-will-not-acquire-ftx\/","title":{"rendered":"Binance Says It Will Not Acquire FTX"},"content":{"rendered":"

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It\u2019s official. Binance will not be purchasing FTX. One day after Binance announced its intent<\/a> to buy its collapsing competitor, the company has now announced it will walk away from the deal, according to an initial report from the Wall Street Journal<\/em><\/a>. This comes after days of animosity shared<\/a> between FTX CEO Sam Bankman-Fried<\/a> and Binance CEO Changpeng Zhao<\/a> that was felt throughout the crypto industry.<\/p>\n

Till now, Binance\u2019s potential purchase of FTX has had the collective crypto and NFT communities on edge. But it seems fears might not be assuaged anytime soon, since, without a support system to help FTX through its current liquidity crunch, it\u2019s unclear what will become of the crypto-exchange giant.<\/p>\n

The Binance buyout: what happened?<\/h2>\n

On the morning of Tuesday, November 8, FTX CEO Sam Bankman-Fried and Binance CEO Changpeng Zhao confirmed that Binance is seeking to acquire FTX. Taking to Twitter, both executives noted that the move stems from an FTX liquidity crunch, which has resulted in a lack of cash or easily convertible to cash assets on hand for FTX to disseminate to its customers.
But just one day after Binance began due diligence (DD) to help the company further understand the state of FTX, sources familiar with the matter told CoinDesk<\/em><\/a> that the deal might be developing in an entirely different direction \u2014 with the source (who wasn\u2019t named) saying it\u2019s highly unlikely that Binance will go through with its acquisition of FTX.<\/p>\n

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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 https:\/\/t.co\/FQ3MIG381f<\/a>.<\/p>\n

\u2014 Binance (@binance) November 9, 2022<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

Now, suspicion has come to fruition \u2014 as Binance is backing out of a deal supported only by a nonbinding letter of intent (LOI). But perhaps this was predictable, as Zhao had continued to comment on the flexibility of the deal, alluding to Binance\u2019s discretion to pull out at any time.<\/p>\n

What\u2019s next<\/h2>\n

Considering Bankman-Fried and Zhao\u2019s\u00a0complicated past<\/a>, it\u2019s too early to say if the two will leave the failed deal on good terms, or return to antagonizing each other in public. Regardless, the Earth-shaking events surrounding the acquisition have already created major ripples throughout the blockchain ecosystem, with the price of FTX\u2019s native token, FTT,\u00a0plunging 80 percent<\/a>\u00a0since announcements were first made.<\/p>\n

Since Zhao declared Binance\u2019s plan to\u00a0liquidate its remaining FTT token holdings<\/a>\u00a0a few days ago, many had speculated that the Binance acquisition was possibly part of a bigger play from the company. But Zhao attempted to assuage these fears in\u00a0a note sent out to Binance employees<\/a>\u00a0on November 9, saying Binance\u2019s potential selloff was orchestrated before any communications between Binance and FTX, and is apparently on hold, as of writing.<\/p>\n

Now that Binance and FTX are parting ways from their short stint, much remains ambiguous regarding the sustainability of the FTX ecosystem. Although the\u00a0dissatisfaction of its customer base<\/a>\u00a0has become palpable, since some users reportedly hosted and subsequently lost their\u00a0entire\u00a0<\/em>net worth on the platform.<\/p>\n

And it\u2019s not only users that have been disheartened by FTX, since, according to the aforementioned report from the Wall Street Journal<\/em>, Binance was also taken aback by a sizeable hole found in FTX\u2019s finances during DD. \u201cIn the beginning, our hope was to be able to support FTX\u2019s customers to provide liquidity, but the issues are beyond our control or ability to help,\u201d Binance said in a Tweet<\/a>.\u00a0<\/p>\n

While Binance didn\u2019t go in-depth about the issues they encountered, news outlets like Reuters have pointed to<\/a> the fact that Bankman-Fried tried to prop up FTX trading affiliate Alameda Research with billions in funds from the now failing exchange, which likely included customer assets. This mishandling of funds will likely lead to courts and regulatory investigations, and perhaps an even more robust crackdown on NFTs and crypto, like we\u2019ve seen with the recent Bored Apes probe<\/a>.<\/p>\n

Now, users and developers are calling for data providers to remove FTX from price feeds, with oracle network Chainlink and others outsing FTT from visibility<\/a> as the exchange\u2019s tradability and credibility continue to vanish. It has even been reported<\/a> that Japan regulators have ordered FTX local division to suspend operations in light of the situation. On top of this, the possibility of FTX seeking bankruptcy unless it secures a lifeline is looming, while Bankman-Fried has taken to Twitter<\/a> to speak of his accountability in this fiasco.<\/p>\n

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5) The full story here is one I’m still fleshing out every detail of, but as a very high level, I fucked up twice.<\/p>\n

The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower.<\/p>\n

\u2014 SBF (@SBF_FTX) November 10, 2022<\/a><\/p><\/blockquote>\n

Some have no qualms\u00a0openly criticizing FTX\u2019s management<\/a>, and might rejoice at the sight of the platform\u2019s fall from the heights of the crypto industry. But insolvency would lead to countless users losing their stored assets. Whether this will come to pass or not, Binance\u2019s stance on the situation might best be summed up by a line from Zhao\u2019s note to employees, which states: \u201cdo not view it as a \u2018win for us.\u2019 User confidence is severely shaken.\u201d<\/p>\n

This story is developing and will be updated as new information becomes available.<\/em><\/p>\n<\/p><\/div>\n