Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse

Binance is backing out of its plans to acquire FTX, the company said Wednesday, leaving Sam Bankman-Fried’s crypto empire on the verge of collapse.

The reversal comes one day after Binance CEO Changpeng Zhao announced that the world’s largest cryptocurrency firm had reached a non-binding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis. Earlier this year, FTX was valued at $32 billion by private investors.

On Monday night, Bankman-Fried was “scrambling” to raise money from venture capitalists and other investors before he went to Binance, according to sources with knowledge of the matter. It is unclear who is next in line to buy the beleaguered crypto exchange.

The failed acquisition of the world’s fourth-largest exchange is the latest chapter in a shocking collapse that’s rocked the crypto world. Bankman-Fried tried to reassure investors just this week that the company’s assets were fine. But after Binance’s Zhao said publicly that his company was selling its holdings in FTX’s native token FTT, the selloff was on, and FTX could do nothing to stop it.

Bankman-Fried said on Tuesday that customers demanded withdrawals to the tune of $6 billion.

Cryptocurrencies plummeted, with bitcoin falling 13% on Wednesday after a similar drop on Tuesday, and ether plunging more than 30% over the past two days.

Here’s the company’s full statement:

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.

In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.

Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.

As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”

This story is developing. Please check back for updates.