Binance’s deal to buy FTX may collapse over ‘big hole’ in finances

Binance’s deal to buy FTX may collapse over ‘big hole’ in finances

Thursday, November 10, 2022

Binance, FTX

Cryptocurrency exchange company Binance is speculated to walk away from a deal to buy exchange company FTX, per a report from the Wall Street Journal, citing a person familiar with the matter.

On Wednesday, WSJ reported that Binance was taken aback by “a big hole it found in FTX’s finances”.

“Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” The report quotes Binance as saying

On Tuesday, Binance moved to acquire FTX cryptocurrency exchange after signing a non-binding Letter of Intent (LOI).

“This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to acquire and help cover the liquidity crunch fully. We will be conducting a full DD in the coming days,” Binance tweeted on Tuesday.

This move will help to solve FTX’s “liquidity crunch,” according to Binance CEO Changpeng Zhao.  FTX boss Sam Bankman-Fried responded to the news saying that development brings everything “full circle” as Binance will be the exchange’s first and last investor.  

Binance had said  it can withdraw from the deal “at any time” as Mr Zhao says that his company will have to do some due diligence before closing the deal.    

Both exchanges have been feuding with one another for a while, with Mr Zhao (CZ) announcing via Twitter on Sunday that his exchange is liquidating all of the FTX tokens (FTT) on its books.

Over the weekend, Mr Zhao tweeted that Binance had decided to offload all of its FTT tokens after speculations around financial difficulties of Alameda Research, the trading firm linked to FTX.    

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