Update: Binance backs out from the nonbinding FTX takeover

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on Nov 9, 2022
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  • There is a feeling that Binance will bolt out after taking a glance at the FTX books.
  • Binance on Tuesday agreed to take over FTX to rescue it from collapsing.
  • The agreement between FTX and Binance is however non bidding.

This article has been updated since its original publication.

Hours after media reports initially suggested that Binance is most likely to back out of its proposed rescue FTX takeover, the news became official.

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Binance confirmed in a Tweet “we have decided that we will not pursue the potential acquisition of FTX.com.”

This marks a huge development in the collapse of the once second-largest crypto exchange FTX. Sam Bankman-Fried’s wealth has already dropped by about 93% since the FTX debacle started.

Binance: ‘issues are beyond our control’

Per Binance’s Tweet, the initial due diligence forced it to walk away from the acquisition. It states:

Binance acknowledges that every time a “major player” in the crypto industry fails, “retail consumers will suffer.” However, the company believes that the crypto ecosystem is greater than any one entity. The Tweet adds:

“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.”

Binance’s nonbinding letter of intent for FTX takeover

The nonbinding letter of intent Binance issued was purely hinged on its due diligence. It is now about a day since Binance offered the intent and Binance appears to have completed the review of FTX’s internal data and loan commitments.

FTX had reportedly sought help from other popular exchanges including OKX and Coinbase to seek help as concerns about its financial stability. This was after Binance CEO Changpeng Zhao said he would sell his holdings of the FTT cryptocurrency issued by FTX in the midst of a storm that had been brewing around FTX Sister Company Alameda Research’s balance sheet.