Binance Pulls Out of FTX Deal, Claims Consumer Funds Misuse

The rapprochement between Binance and FTX has hit a snag, as the former has withdrawn from a proposed bid to buy out its competitor, a Binance spokesperson has confirmed. The two companies were at each other throats over the sale of FTT tokens, minted by FTX, amid a market-wide collapse for the cryptocurrency industry, which was followed by FTX signaling that it may be wobbling under the weight of the rapid market devaluation.

FTX Left to Fend for Itself after Binance Withdrawal

FTX founder Sam Bankman-Fried may be partly to blame, as the cryptocurrency exchange woes began after it transpired that FTX’s sister company, Alameda Research, held much of its balance sheet assets in FTT. Commenting for CoinDesk, Binance said that it has done extensive due diligence and took in light new evidence that indicated that FTX had mishandled customer funds.

There are alleged US agency investigations as well, which have dissuaded Binance from continuing with the purchase. Originally, it was planned for Binance to land a helping hand to FTX and buy out the exchange in order to “protect consumers.” The spokesperson said that it was indeed Binance’s desire and ambition to make sure that it helps bolster FTX’s liquidity for the sake of consumers.

However, the message that followed was not one of hope. The spokesperson said that businesses that allow themselves to misuse consumer funds will be “weeded out by the free market,” spelling an ominous future for FTX.

“As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger,” the spokesperson said for CoinDesk. FTX is still facing a liquidity crunch that will have unpredictable consequences for customers, who have already begun withdrawing their funds from the exchange and are reluctant to take Bankman-Fried’s assurances that the exchange has enough cash on hand to protect them.