Binance gives up deal to save the rival crypto exchange FTX

Binance will give up his deal to save the FTX cryptocurrency exchange from Sam Bankman-Fried and refer to concerns about his business practices and studies by the US financial supervisory authorities.

The step takes place one day after Binance, one of the world's largest crypto trading places, had temporarily agreed to buy FTX after suffering a liquidity crisis.

"As a result of the entrepreneurial Due Diligence and the latest news reports on improperly treated customer funds and presumed investigations by the US authority, we have decided that we will not continue the potential takeover of FTX.com," Binance said in a late explanation on Wednesday.

The U-turn came when the Securities and Exchange Commission expanded an investigation into FTX, which according to a person familiar with the matter included the investigation of the platform and administration of customer funds.

The highest supervisory authority of Wall Street initiated the investigation months ago, but sent additional information requests after Binance announced on Tuesday to acquire FTX in the middle of a liquidity crisis, the person added. The agency also examines FTX's relationship with a US company, FTX Us.

The Commodity Futures Trading Commission also examined the company, reported Bloomberg. The SEC and the CFTC rejected a statement. FTX did not immediately respond to inquiries about comments on the regulatory studies.

Bitcoin and other crypto -related assets have been very popular in the past two days, since retailers are concerned about the consequences of a possible collapse of FTX, one of the largest crypto trading places, and Alameda Research, a large trading company for digital assets that are also controlled by Bankman.

"The markets are now in full panic," said Jon de Wet, Chief Investment Officer at the crypto asset manager Zerocap. "Hell breaks off"

Bitcoin, the most active cryptocurrency, lost $ 12 percent and thus reached the lowest status since the end of 2020. Solana, A Coin Alameda, Alameda counts as an important supporter, fell by 46 percent, while the shares of the CoinBase listed in the USA fell by 9.5 percent.

The U -turn of Binance comes after FTX has granted that it was unable to meet the payout requirements of customers without external funds.

The CEO of Binance, Changpeng Zhao, after only a few hours of negotiations on Tuesday, reached an agreement on the purchase of FTX and the protection of his customer deposits after Bankman-Fried had asked his former investor, who had become a rival.

"Before that I had very little knowledge of the internal state of things at FTX," Zhao said to his employees in a memo on Wednesday.

The bony boss had hoped to prevent more customers from suffering losses after a number of top-class failures of crypto companies have shaken confidence in the sector this year. He also wanted to prevent a domino effect of damage to companies that are committed by lending or trading positions in FTX and Alameda.

"In the beginning we hope to be able to support the FTX customers in providing liquidity, but the problems are outside of our control or our ability," said Binance. "Every time an important player fails in an industry, retail customers will suffer."

Additional reporting by Scott Chipolina