Binance Implies FTX Misused Customer Funds and Walks Away From Deal
Timothy Fries | Nov 10, 2022 12:56AM ET
Binance just announced it would not go forward with the FTX acquisition.
After a day filled with uncertainty, Binance announced it would not go through with its acquisition of FTX. In the immediate aftermath, most cryptocurrencies declined, while Sam Bankman-Fried and FTX issued no public statements. Binance’s CZ expressed his regret in a short tweet an hour after his company made the announcement.
Many individuals and outlets have been expressing their doubts on whether Binance would go through with its acquisition of FTX since the moment Changpeng Zhao and Sam Bankman-Fried announced they signed a non-binding letter of intent to bail out the latter’s company. On Wednesday afternoon, the doubters were proven right when Binance announced it would not be going forward with the acquisition.
Binance explained that they backed out after doing their due diligence and due to the reported mishandling of users’ assets on FTX’s part and allegations of regulatory probes . The language leaves some ambiguity as to whether Binance’s process uncovered foul play in addition to insolvency issues or if rampant speculation online was enough to make FTX too poisonous to touch.
Another report stated that Sam Bankman-Fried told investors some time before Binance announced that his company would likely go bankrupt without a massive cash injection. Allegedly, the company was facing an $8 billion quit en masse during the day.
Around the time of Binance’s announcement, Alameda Research’s death spiral for some time, its stunning implosion started in earnest this Saturday. An unknown address, later confirmed to be Binance, was noted for transferring nearly $600 million worth of FTT to Binance. CZ explained that his company was liquidating their FTX tokens due to recent revelations and hinted that the situation was similar to the Terra LUNA collapse.
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The move immediately caused FUD and led to widespread speculation that the action resulted from a feud between Zhao and Bankman-Fried. Both CZ and SBF went on record stating that there was no war between them, and Binance’s CEO stated that he spends his “energy building, not fighting.” SBF also stated that his company had no liquidity issues and that “FTX is fine” in a tweet that was since deleted.
The immediate damage was already done, however, as it was reported that turned to Silicon Valley to secure a $1 billion injection before going to Zhao for help.
This is a developing story and will be updated when new details emerge.
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