Wednesday, 7 December, 2022

FTX: Cryptocurrency giant Binance walks away from bailout

FTX: Cryptocurrency giant Binance walks away from bailout

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Binance, the world's biggest cryptocurrency exchange, has walked away from a bailout deal of its smaller rival FTX.

Binance said that after due diligence, it would not pursue the deal.

It said reports of "mishandled customer funds and alleged US agency investigations" had swayed its decision.

FTX had been struggling with a surge in withdrawals that caused a "liquidity crunch".

FTX is a big crypto exchange and people use it to buy and sell various crypto currencies.

Concerns about FTX's financial health reportedly triggered $6bn (£5.2bn) of withdrawals in just three days.

The Reuters news agency reported that the US Securities and Exchange Commission (SEC) was investigating FTX's handling of customer funds and its crypto-lending activities.

The markets regulator was examining whether the platform had followed securities laws about keeping customer assets separate and whether it had traded against customers.

FTX's founder Sam Bankman-Fried and Binance's chief executive Changpeng "CZ" Zhao are two of the most powerful people in the cryptocurrency market and high-profile rivals.

Binance stepped in on Tuesday, saying it had signed a letter of intent to buy FTX's non-US unit. But it added it had "the discretion to pull out from the deal at any time".