Binance, which is the biggest cryptocurrency exchange in terms of volume, has announced that it would terminate its partnership with FTX, which is the third largest cryptocurrency exchange in terms of volume.
On Tuesday, Binance signed a letter of intent to acquire its ailing rival, FTX, in what seemed to be a prospective rescue of the latter company under a liquidity crisis. FTX is a cryptocurrency exchange that has been having financial difficulties. But a little more than 24 hours later, that strategy was a complete failure.
In a statement to The Wall Street Journal, Binance said that it made the decision to withdraw after analyzing the structure and records of the firm. According to Binance, “Our objective was to be able to serve FTX’s consumers in order to offer liquidity; nevertheless, the challenges are beyond our control or capacity to help.”
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of [FTX],” Binance said in a tweet. “This decision was made in light of the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations.”
Binance proceeded by saying, “Retail customers will be negatively impacted each time a significant player in an industry is unsuccessful.” “Over the last few years, we have seen the crypto ecosystem growing more robust, and we think that, given enough time, anomalies that abuse user money would be weeded out by the open market.”
TechCrunch’s inquiries for comments were not immediately met with a response from either Binance or FTX.
CoinDesk was informed earlier today by people familiar with the situation that top-level executives at Binance were concerned about the loan promises made by FTX. The claim comes after Binance CEO Changpeng Zhao tweeted that FTX “falling down is not beneficial for anybody in the industry.” The article follows in his footsteps.