Binance, a cryptocurrency exchange, pulled out of a deal with FTX to buy it. Binance claimed that the company’s problems were beyond our control and that we couldn’t help them.
Binance, the largest cryptocurrency exchange in the world, stated that it had reviewed FTX’s finances to ensure due diligence. It cited reports of “mishandled customer money and alleged US Agency investigations” as reasons for announcing the cancellation of the deal.
This is the latest twist in an exciting and fast-moving story involving some of the most powerful players in the crypto world.
It is also a dramatic fall for Sam Bankman Fried, the 30-year-old rock star of the industry that founded FTX in 2019. Insiders refer to Bankman-Fried as SBF. He was known for his ability to orchestrate a series of bailouts for struggling crypto firms earlier in the year. As part of a campaign for crypto mainstreaming, he has been featured in ads with celebrities such as Gisele Bundchen.
FTX, like the rest of Bankman-Fried’s crypto empire, is at risk of collapse without a bailout.
According to Wall Street Journal, Bankman Fried told investors Wednesday that he requires emergency funding to cover an amount of up to $ 8 billion due to withdrawal requests received recently.
Wednesday’s turmoil at FTX caused virtually all digital assets to sink.
Bitcoin fell below $16,000 after Binance said it wouldn’t buy FTX. The cryptocurrency has dropped more than 75% since its record high of $69,000 last year. Ether, the second-most-popular token, dropped 13% to $1.137 — another 75% drop from its record high.
Representatives from Binance and FTX did not immediately respond to Wednesday’s requests for comment.
It’s been a tough week for assets that are known for their volatility.
Over the weekend, the FTX saga escalated when Binance’s CEO Changpeng Zhao said that his company would liquidate its FTX holdings as speculation swirled around about the company’s financial health. That forced Bankman-Fried to make a capital call of $580 million.
Despite the animosity between Zhao and Bankman-Fried, they appeared to have come to an agreement that shocked the crypto world when Binance announced it would acquire FTX subject to due diligence.
Investors were still concerned about the deal’s success and quickly sold all digital assets.
Bloomberg reports that the Securities and Exchange Commission and Commodity Futures Trading Commission are already investigating the FTX meltdown. According to the outlet, regulators are looking into whether FTX handled customer funds properly. This was cited by people familiar with this investigation.
SEC spokesperson said that the commission doesn’t comment on whether an investigation is underway or not.
The CFTC declined to comment.