Binance, one of the world’s largest cryptocurrency exchanges, has walked away from a bailout of its smaller rival FTX.
Binance said that after due diligence, it would not pursue the deal any further.
Reports about “mishandled customer funds and alleged investigations by the US authorities” influenced his decision.
FTX struggled with a surge in withdrawals that caused a “liquidity crisis”.
Concerns about FTX’s financial health reportedly prompted $6 billion (£5.2 billion) in withdrawals in just three days.
Reuters news agency reported on Wednesday that the US Securities and Exchange Commission is investigating FTX’s handling of customer funds and its crypto lending activities.
The market regulator checked whether the platform had complied with securities laws regarding segregation of client assets and whether it had traded against clients.
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said Binance a statement posted on Twitter that the issues FTX faced were “outside of our control or ability to assist”.
“Any time a major player in an industry fails, consumers will suffer. We’ve seen the crypto ecosystem become more resilient over the past few years, and we believe that over time, outliers who abuse user funds will be weeded out by the free market.”
FTX founder Sam Bankman-Fried and Binance CEO Changpeng “CZ” Zhao are two of the most powerful figures in the cryptocurrency market and high-profile rivals.
FTX has been contacted for comment.
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