The Reason Why Binance Back Off Deal to Buy FTX in Less Than 48 Hours
The Reason Why Binance Back Off Deal to Buy FTX in Less Than 48 Hours.
Binance announced on Nov. 9 that it would not pursue its planned bailout of FTX, less than 48 hours after Binance CEO Changpeng “CZ” Zhao announced his intentions.
The Issues is “Beyond Our Ability to Help”, CZ Says
On Nov. 8, Binance signed a nonbinding letter of intent allowing it to acquire the FTX exchange fully, partially, or walking away from it.
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com,” he said on Twitter.
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
Read More: Binance CZ On What The Crypto Community Can Learn From FTX
In the beginning, Binance had intended to provide its customers with liquidity; however, the exchange was “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,” he added.
The Community Response To Binance FTX Deal
FTX’s shocking news has triggered various reactions from the crypto community, including Ki Young Ju, co-founder and CEO of CryptoQuant, an information platform that focuses on cryptocurrency, telling his 313.8K Followers that buyers are highly likely not to take the deal.
“Buyers are highly likely not to take the FTX deal if they see shady on-chain transactions. Sam, FTX, and Alameda invested in many decent web3 projects and also got investments from traditional finance. It’s bigger than 3AC. We should think of the worst scenario. Hang in there,” he said on Twitter.
Read More: Amid FTX Situation, Coinbase CEO Explains What Differentiates The Exchange from Others
One Twitter user said, “What a mess. FTX and Alameda were not trustless, permissionless and decentralized – the true ethos of DeFi. This latest black swan event really hurts, and it will take time to climb back up the mountain. But if you have a strong conviction in DeFi, its onwards and upwards.”
What a mess.
FTX and Alameda were not trustless, permissionless and decentralized – the true ethos of DeFi.
This latest black swan event really hurts, and it will take time to climb back up the mountain. But if you have a strong conviction in DeFi, its onwards and upwards. https://t.co/BASGtV5B1H
— nftxdefi.lens 🌿 | 👨🏼🌾 | (💙,🧡) (@NFTxDeFi) November 9, 2022
Meanwhile, Twitter user who goes with pseudonym @daotopiaVC said “Now speculations go towards Alameda used a sort of hedge during this crash and market manipulation. #FTX and Alameda has really close ties and it won’t be surprising if the trading desk took opportunities of “insider” deals such as a potential bailout .”
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