Crypto market crashes as Binance walks out of FTX deal, amid US govt probe
Binance, FTX logo
Major cryptocurrency platform Binance has announced that it is walking out of a non-binding deal to purchase failing rival FTX Trading, which has been hit by a liquidity crunch.
The fallout had an adverse impact on cryptocurrencies as bitcoin dropped below $16,000, while shares in cryptocurrency exchange Coinbase fell by more than 9.5 per cent.
In a statement posted on Twitter, Binance said that the issues facing FTX were "beyond our control or ability to help"
"Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market."
It said that the decision of not to move forward with the deal was made after due diligence.
The exchange said that its decision was taken after reports of FTX "mishandling customer funds and alleged US agency investigations".
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"As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralisation, the ecosystem will grow stronger,” it added.
Watch |Binance walks away from FTX deal due to 'mishandled funds'
FTX's founder Sam Bankman-Fried and Binance's chief executive Changpeng "CZ" Zhao are regarded as the two of the most powerful people in the cryptocurrency market and high-profile rivals.
Though there was no official reaction from FTX, Mr Zhaotweeted on Wednesday: "Sad day. Tried, but [crying emoji]".
A notice on its website said, "FTX is currently unable to process withdrawals. We strongly advise against depositing."
Meanwhile, the US securities regulator is investigating FTX's handling of customer funds amid a liquidity crunch, as well its crypto-lending activities, Reuters reported on Wednesday citing a source familiar with the matter.
The Securities and Exchange Commission (SEC) is examining whether the platform is following securities laws related to segregation of customer assets and trading against customers, the source said. The investigation was initiated few months ago.
The Commodity Futures Trading Commission (CFTC) is also probing the issue, Bloomberg reported earlier on Wednesday.
(With inputs from agencies)
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