Reasons for Binance to Withdraw from FTX Deal

While it looks like Binance will take over the Bahamas-based crypto exchange FTX, new reports suggest that may not be the case anymore. According to CryptoPotato, the crypto exchange led by Changpeng Zhao may be pulling out of the FTX deal. Reports that Binance may be pulling out of financial support for its rival exchange come just a day after the announced buyout.

Following the Binance reversal report, the crypto market has taken another major hit, with Bitcoin (BTC) now trading around $17,000, its lowest level this year.

New developments in takeover deals

According to insider sources, Binance decided not to complete the FTX transaction after reviewing the finances of the exchange run by Sam Bankman Fried. The two companies announced a purchase agreement yesterday, which resulted in FTX experiencing a spate of recall requests from the respective users.

During the announcement, Bankman-Fried explained that Binance’s assistance would be critical in several areas. The bailout will help protect customers, address liquidity issues and ensure a healthy balance of asset support. The Founder and CEO of FTX explain:

“Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. – we apologize for that.”

Moreover, following the announcement, Bankman-Fried expressed his confidence in transferring the affairs of his company to Binance. According to him, Binance’s track record speaks for itself and FTX is “in the best of hands”.

Bankman-Fried’s comments also come amid a decline in the value of the native FTT token on its exchange. The FTX token has been in decline lately due to liquidity issues. This decline also resulted in a loss of approximately $1 billion in DFT market value.

Binance has always been independent of FTX trading

When Binance decided to step in and offer a real bailout for FTX, Zhao clarified that the deal was non-binding. According to the Binance CEO, “This is a very dynamic situation and we are evaluating the situation in real-time. Binance reserves the right to withdraw from the transaction at any time. We expect FTT to be very volatile in the coming days as it develops.”

In addition, Zhao asked those involved in the deal not to comment publicly or internally about its development. He asked parties who were not directly involved not to ask questions. According to the Binance CEO, things will develop. He also took to Twitter to share internal memos that were shared with global collaborators.

FTT initially rallied strongly after the acquisition was announced, surging as much as 25% from a low of $14. However, the token’s recent free fall has resumed following reports that the crypto has halted withdrawals. As of now, FTT changed hands at around $4.16 compared to just over $22 earlier in the week.

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