Crypto

Binance Backs OUT from FTX Purchase: Renewed Crypto Market CRASH?

11/09/2022
Bitcoin Ethereum News

Breaking News: Binance backs out from its decision to acquire FTX. This news took another heavy toll on the crypto market. In the past 24 hours, the crypto market lost on average around 14%. Will the crypto market continue to crash further in the coming few days? In this article, we go over the details of Binance canceling its deal to buy FTX. We’ll also analyze the top 10 cryptos and see how much they lost in the past 24 hours.

Binance backs out from the FTX acquisition

Before we go into how Binance backed out of the deal, we must understand what has happened.

Why is FTX in bad shape?

  • FTX is the third-largest crypto exchange
  • The company engaged in buying broke crypto companies and was over-leveraged in their crypto holdings
  • FTX did not back its customers’ deposits properly
  • Binance engaged in a selloff of FTX’s tokens FTT in the open market

On the other hand, the CEO of FTX was claiming just 2 days before announcing that he went bankrupt that FTX is doing just fine. He also hinted at a competitor trying to smear their name.

FTX Announces its bankruptcy

The CEO if FTX announced in a tweet that they reached a “critical phase” and that they turned to their “good friends” over at Binance. The latter offered a helping hand in the beginning and announced that they were looking into acquiring FTX.

CZ, the CEO of Binance clearly stated that they simply signed an LOI (letter of intent), which is non-binding. This means that they can walk out of the deal at any time. Well, this is what happened after just 1 day.

FTX

Binance Backs out from the FTX Acquisition

The crypto world was shocked to hear the news that Binance walks out of the deal. The reason behind this rational was that the due diligence that Binance did on FTX revealed that the company mishandled its customers’ deposits. This is a big red flag not only for FTX, but for most other crypto exchanges. This phenomenon can happen to anyone now, and the regulators have their eyes wide open.