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FTX-Binance deal goes bust; CEO looking at all options

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FTX’s seemingly last hope of getting out of its severe liquidity crunch collapsed on Wednesday as Binance pulled out of the deal after due diligence, stating that the problems at FTX are beyond their control or ability to help. 

Following this, FTX has temporarily suspended customer onboarding until further notice. Reuters reports that in a message sent to the company’s employees, CEO Bankman-Fried claims to be looking at all available options to save the company and that his goal is to protect the customers as well as provide any help he can to staff and investors.

The CEO also claims that Binance had previously not expressed any concerns about the deal. Binance’s official statement, which was reportedly first given to the media and not FTX, claims that the company did initially hope to be “able to support FTX’s customers to provide liquidity”, but the issues at FTX were beyond Binance’s abilities. 

Bitcoin is now nearly 75% down from its all-time November 2021 high. | Photo by by-Andre Francois Mckenzie

The company is currently falling short of up to $8 billion, and the effects are spreading throughout the crypto market. Bitcoin is down around 75% from its all-time high since November 2021. Wednesday also saw Nasdaq fall nearly 2.5%, with Dow Jones Industrial Average and S&P 500 following nearly 2%. 

FTX’s problems don’t end here, either. Bloomberg reported that the SEC is also looking into the exchange for improper handling of customer funds during its liquidity crisis. The Department of Justice is also looking into the matter, working alongside the SEC. 

Binance pulling out of the deal leaves FTX with an unknown and seemingly dismal fate. Outside of losses to the exchange itself, Bankman-Fried and investors, including the SoftBank Group and Sequoia Captial, among others, individual customers can also lose funds. Sequoia even went as far as writing off its $150 million investment in the company because of a solvency risk, effectively marking out its investment to zero.

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Yadullah Abidi

Yadullah Abidi

Yadullah is a Computer Science graduate who writes/edits/shoots/codes all things cybersecurity, gaming, and tech hardware. When he's not, he streams himself racing virtual cars. He's been writing and reporting on tech and cybersecurity with websites like Candid.Technology and MakeUseOf since 2018. You can contact him here: