Binance announces on Twitter that there is finally no longer any question of merging with FTX to save the exchange platform from bankruptcy. Binance management explains: “We have decided that we will not pursue the potential acquisition of FTX.com,” says Binance.
And to add that the decision results “the diligence that is expected of a large group, but also the latest echoes in the press about poor management of customer accounts, in addition to the supposed opening of investigations by several American agencies”.
Binance will not save FTX, bankruptcy is increasingly likely
A way of saying that Binance was somewhat spooked by what it discovered while looking into the FTX.com accounts. Binance continues: “At first we hoped to be able to support FTX customers with cash, but the problems are out of control and beyond our ability to help.”
Yet, Binance explains, saving FTX.com was in its interest and in the interest of the entire industry: “every time a major player in the sector fails, it is the small consumers who suffer. We have seen over the past few years that the crypto ecosystem is more resilient and we believe that the time for an industry without these anomalies that mismanage their users’ funds will come through the free market.” wants to believe Binance.
The firm concludes: “As regulatory frameworks develop and the industry continues to move towards more decentralization, the whole ecosystem is getting stronger”. This bad news is the epilogue of a week of descent into hell for FTX. On November 2, 2022, Coinbase revealed that the platform was hit by a liquidity crisis.
Binance boss Changpeng Zhao then announced his intention to sell the equivalent of $529 million worth of FTT, the platform’s crypto. A decision with terrible consequences for FTX because it destroyed the value of its token. Later, Binance announced its intention to attempt a merger.
Better to protect your crypto on a local wallet
But even then, many analysts doubted the deal could be completed, and early rumors of the merger project exploding in midair began to spread. Especially since Changpeng Zhao was already stressing that the agreement did not commit Binance to anything.
The CEO explained in particular: “The situation is changing fast, and we are evaluating everything in real time. Binance may opt out of the Agreement at any time at its discretion”. On the FTX website, we can read a message that explains to customers: “FTX is currently unable to process withdrawals. We strongly advise against making deposits”.
Obviously, the announcement causes difficulties far beyond the main tokens traded on FTX.com, since almost all cryptocurrencies were still in the red this morning. And all the more so since FTX is now in an inexorable spiral towards bankruptcy. One of the biggest investors in FTX with $210 million, Sequoia Capital, announces for example this morning:
“Given our current understanding of the situation, we are increasing our investment [dans FTX.com] at 0 dollars”, explains Sequoia Capital on Twitter. This is not the first time that a major platform has fallen due to lack of sufficient liquidity.
The best advice we can give to crypto investors who read us is to prefer local wallets. And if possible something really secure, outside your computer like a Ledger, for example, which is a secure physical wallet of French origin.