Cryptocurrency platform Binance said on Wednesday it will not be helping its rival FTX.com after all, raising questions about the latter’s survival and creating further turmoil in the world of virtual currencies. Binance, which holds the top spot, announced on Tuesday that it is considering buying FTX.com to help it out of serious trouble.
But after conducting an audit of the operationswe have decided not to proceed with the transaction to acquire FTX.com“, the company explained on Twitter. The company also notes the emergence of press reports about FTX’s mismanagement of client funds and investigations by US authorities.
“Initially, our hope was that we could help FTX customers provide liquidity, but issues are beyond our control or ability to assist.Binance noted. The future of FTX.com and its founder Sam Bankman-Fried is now uncertain. The company did not immediately respond to AFP’s request.
But according to Bloomberg, which cited a person familiar with the negotiations, Sam Bankman-Fried told FTX.com investors that without an imminent influx of cash, the company would have to file for bankruptcy. The platform reportedly needs up to $8 billion, and is looking to raise it through borrowing, selling stock, or a combination of the two, the entrepreneur reportedly said.
No withdrawals possible
However, FTX was still considered a solid player in the industry until recently. Its founder is a figure in the cryptocurrency world, and FTX was valued at $32 billion in its last fundraising in January. But in recent days, doubts have surfaced about his accounts and his relationship with the Alameda cryptocurrency investment fund, also founded by Sam Bankman-Fried.
Binance CEO Changpeng Zhao claims that FTX asked him for help “serious liquidity crisissigned a letter of intent on Tuesday to buy FTX.com, which does not include US affiliate FTX.us. However, he also detailed that before confirming his intention, he would conduct an audit for several days, which is a standard procedure in merger-acquisition operations.
“Whenever a major industry player goes bankrupt, consumers sufferBinance pointed out on Wednesday that FTX.com customers may be affected by the situation. The following message was displayed on the platform help page.FTX is currently unable to process withdrawals. We strongly recommend refraining from deposits.»
The turmoil shakes up the cryptocurrency industry, which has already been on fire in recent months due to several bankruptcies and investors’ preference for less risky assets. Bitcoin fell below $16,000 for the first time in two years on Wednesday.
More setup
FTX’s condition worsened in a few days. An article on the niche site first noted Alameda’s massive investment in FTX’s own cryptocurrency, FTX Token (FTT), which is a reflection of lame accounting. Soon after, Changpeng Zhao announced that he was selling his FTT reserves held by Binance as part of the capital outflow from FTX. Sam Bankman-Fried then criticized his company’s financial health.unsubstantiated rumours“and it’s still secured on Monday.”FTX is good“.
But the platform’s clients heard otherwise and started withdrawing their funds en masse. Sam Bankman-Fried then turned to her rival in an attempt to save the furniture. A surprising request from the entrepreneur, who until recently was compared to a white knight after offering to bail out digital currency firms BlockFi and Voyager Digital in June.
He was also known for regularly lobbying politicians in Washington for regulation of the cryptocurrency industry. Binance claimed on Twitter on Wednesday that the cryptocurrency ecosystem “will strengthen“gradually as”regulatory frameworks will be developed” and which field “will continue to move toward greater decentralization“.
Source: Le Figaro
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.