Crypto giant Binance walks away from FTX bailout deal
Binance, the world’s biggest cryptocurrency exchange, pulled out from a bailout deal with its smaller rival FTX.
Binance said that after due diligence, it would not pursue the deal.
It said reports of “mishandled customer funds and alleged US agency investigations” had swayed its decision.
FTX had struggled with a surge in withdrawals that caused a “liquidity crunch”.
Concerns about FTX’s financial health reportedly triggered US$6 billion (221.64 billion baht) of withdrawals in just three days.
Reuters reported on Wednesday that the US Securities and Exchange Commission was investigating FTX’s handling of customer funds and its crypto-lending activities.
The market regulator was examining whether the platform had followed securities laws about keeping customers’ assets separate and whether it had traded against customers.
Binance said in a statement posted on Twitter that the issues facing FTX were “beyond our control or ability to help”.
“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”.
High-profile rivals FTX founder Sam Bankman-Fried and Binance chief executive Changpeng “CZ” Zhao are two of the most powerful people in the cryptocurrency market.
Bitcoin fell more than 15% after Binance pulled out of the deal, while Coinbase was down by over 9.5%.
There is a growing list of cryptocurrency businesses that have failed because of a lack of cash reserves.
Adding to the pressure, the SEC and other regulators have been ratcheting up scrutiny of the industry as concerns grow about how crypto platforms trade.
Credit: BBC News
