BENGALURU: A day after agreeing to bail out troubled FTX, the largest crypto exchange Binance has walked away from the acquisition deal, resulting in Bitcoin plunging to the lowest level - below $16,000- in two years.
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance said. The crypto exchange added that every time a major player in an industry fails, retail consumers will suffer. “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,” it said.
Sam Bankman-Fried (SBF) led FTX was one of the top crypto exchanges, but it is now facing a severe liquidity crunch. Crypto exchanges are now advising users to observe the market carefully as FTT, the token of FTX, crashed nearly 70%. FTX has kept its own token as collateral against its huge valuation which made anyone in power to fluctuate the currency at any given time, said Taaran Chanana, MD and co-founder of MemeChat.
Binance CEO Changpeng Zhao also tweeted saying never use a token you created as collateral and don’t borrow if you run a crypto business. “Don’t use capital efficiently. Have a large reserve,” he said.