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Why is Binance walking away from acquiring FTX within hours of announcing the deal?

Markets reacted sharply to Binance’s decision while FTX says it is working to “avert further deterioration”.

The ongoing saga of Binance’s pending acquisition of FTX hit an anti-climactic crescendo after the world’s largest crypto exchange backed out of the deal nearly 24 hours after announcing it. Binance shared a series of tweets in which they revealed that they were pulling the plug following news reports alleging FTX’s mishandling of customer funds, and the US investigations. The company said that it was looking to support FTX’s customers but the issues were beyond its control and the exchange’s ability to help investors. The decision came as a shock to many as the markets reacted sharply with Bitcoin (BTC) dropping to $16,700, while Ethereum (ETH) was hovering near $1,100. https://twitter.com/artijourno/status/1590579582599823360 Why it matters: The decision to walk away from the deal is likely to impact investor confidence in the crypto market adversely. It is a reminder that the crypto sector needs to be regulated in order to ensure that such incidents do not happen in the future. Moreover, it is clear that FTX was playing fast and loose with investor funds and Sam Bankman-Fried must be held accountable to restore faith in the industry. https://twitter.com/cz_binance/status/1590463239925944320 What do we know about the US investigation: It came to light that the Securities and Exchange Commission (SEC) and the US’ Justice Department were planning to investigate FTX, according to The Wall Street Journal. The report said that the SEC’s investigation is focused on the company’s US subsidiary, FTX US. It is because they believe some of these assets, as well as FTX’s…

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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