November 11, 2022: -On Wednesday, Binance is backing out of its planning to acquire FTX, the company said, leaving Sam Bankman-Fried’s crypto kingdom on the collapse.
The reversal comes one day following Binance CEO Changpeng Zhao’s announcement that the most prominent cryptocurrency company had reached a non-binding deal to purchase FTX’s non-U.S. businesses for an amount, which rescues the company from a liquidity crisis. Private investors valued FTX at $32 billion earlier this year.
“In the starting, we hoped to be able to finish FTX’s customers to provide liquidity,” Binance said. “But the issues are behind our control or ability to help,” Binance added.
On Monday night, which faces a liquidity crunch, Bankman-Fried was scrambling to increase money from venture capitalists and different investors before he signed with Binance, according to areas with knowledge of the situation. Zhao agreed, but his presence quickly changed course, which cited reports of “mishandled customer funds and alledging to the U.S. agency investigations.”
Who is coming in line to buy the beleaguered crypto exchange? Bankman-Fried told investors that the firm is facing a decrease of up to $8 billion from taking requests and needs emergency funding, according to a spokesperson.
The disintegration of the Binance-FTX deal is the chapter in a shocking collapse rocking the crypto world this week. Bankman-On Monday, Fried tried to reassure investors that the company’s assets were acceptable. But following Binance’s, Zhao added that the public that his company that sold its holdings in FTX’s recent token FTT, the selloff was on, and FTX could do to stop it.
According to reporter Eric Newcomer, one of Silicon Valley’s most prominent VC firms, Sequoia Capital, decreased $210 million into the company. FTX told investors that operating income in 2022 was projected to fall to $144 million, down from $338 million in 2021, while earnings were projected to increase to $1.1 billion from $1 billion in the previous year, Newcomer reports.
On Tuesday, Bankman-Fried said that customers had demanded withdrawals of $6 billion. He deleted tweets from the last day indicating FTX had enough areas to cover clients’ holdings.
On Wednesday, Zhao told Binance employees in a memo that he “did not master plan” the collapse of FTX. He said FTX going decrease is “not good for anyone in the industry,” and employees are not witnessing “see it as a win for us.”