Binance Is Strongly Leaning Toward Scrapping FTX Rescue Takeover After First Glance at Books: Source

Cryptocurrency exchange giant Binance is highly unlikely to go through with its proposed acquisition of struggling rival FTX after less than a day of reviewing the company, according to a person familiar with the matter.

Read More: Crypto Exchanges Scramble to Compile ‘Proof-of-Reserves’ as FTX Contagion Grips Markets

Binance’s nonbinding letter of intent for the takeover – announced Tuesday as FTX’s financial position appeared to be spiraling out of control – hinged on Binance performing due diligence. Roughly half a day into that process of reviewing FTX’s internal data and loan commitments has led Binance to strongly lean against completing the transaction, the person said.

Binance declined to comment on the current status of the proposed deal. FTX also declined to comment.

After CoinDesk released this story, losses in the cryptocurrency and U.S. stock market worsened. Bitcoin (BTC) revisited its 2022 low of around $17,100, and ether (ETH) returning to its post-Merge low of $1,160. The CoinDesk Market Index (CMI) recently was down 5.2% from 24 hours earlier. The S&P 500, the benchmark for American equities, fell to its low of the day.

Read More: Binance CEO Zhao Says Planned FTX Acquisition Is Not a ‘Win for Us’

Backing out would be yet one more stunning step in a week of drama. CoinDesk a week ago published a scoop about the balance sheet of Alameda Research, the corporate sibling of FTX. The story prompted concerns about the financial stability of Sam Bankman-Fried’s crypto empire, which includes both companies, leading to a liquidity crunch at FTX – a situation exacerbated Sunday when Binance CEO Changpeng Zhao said he would sell his holdings of the FTT cryptocurrency issued by FTX.

Binance then struck the deal after FTX had sought help from and was turned down by other large exchanges, Coinbase and OKX, according to people familiar with the matter.

UPDATE (Nov. 9, 15:43 UTC): Adds in third paragraph that FTX declined to comment.

UPDATE (Nov. 9, 15:49 UTC): Adds in fourth paragraph that losses in the crypto market worsened after this story was published.

UPDATE (Nov. 9, 16:01 UTC): Adds in fourth paragraph that the S&P 500 fell to its low of the day.