Binance, the largest crypto exchange, has backed out of its decision to purchase a crypto exchange, FTX.COM after the crash.
Binance had earlier announced its intention to purchase the crypto platform before stating it could still pull out of the deal depending on due diligence.
This was later confirmed by the company which said the issues surrounding the crypto exchange acquisition were beyond their control.
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Binance Reaction
Binance in its defense said,
“As a result of corporate due diligence, and reports regarding mishandled customer funds and alleged US agency investigations, we will not be purchasing https://ftx.com/.”
They added that every time a major player in the industry fails, retail consumers will suffer. “We have seen over the last several years that the crypto ecosystem is becoming more resilient. We also believe in time that outliers that misuse user funds will be weeded out by the free market.”
The Result
The U-turn marks another major event in the decade-long story of cryptocurrencies. Just yesterday, the founder of Binance suggested that the purchase of FTX was necessary for confidence in the cryptocurrency market.
According to him, the decision will help to protect users and help cover the liquidity crunch. Now pulling out implies FTX might be headed toward bankruptcy and could take down the entire crypto market with it.
Recall that Bitcoin prices fell 15% to $15.7k on Wednesday as investors liquidated millions of tokens in investments.
Conclusion
It is reported that there could be a global contagion from the collapse of FTX.COM. This could spread beyond cryptocurrency to the mainstream debt market.
Investors are already worried and concerned about which global banks might be exposed to FTX, directly or indirectly. Stay alert.
The good news, however, is that as regulatory frameworks are developed and the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.
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