Dramatic events are unfolding in the crypto industry as cryptocurrency exchange Binance is reportedly going back on its offer to acquire FTX. Binance, founded by Changpeng Zhao in 2017, had a few hours ago sent a non-binding letter of intent to buy FTX, another cryptocurrency exchange based in the Bahamas. Binance had offered to purchase non-US operations of FTX which has been facing a severe liquidity crunch due to recent developments in the crypto markets.
The latest report from CoinDesk suggests that Binance decided to back off from the deal after checking the books of the rival crypto exchange firm. There is further information available regarding what is the current status of the nonbinding offer. Neither Binance nor FTX have so far made any statements or released any comments regarding the news reports.
There are also unconfirmed reports that the larger loan commitments of the FTX crypto exchange are what forced Binance to rethink its acquisition order.
The announcement regarding the acquisition of FTX was made by Changpeng Zhao himself on Tuesday as the firm reached out to Binance for help amidst the severe financial crisis.
Binance earlier this month announced that it will sell holdings of FTT (crypto token owned by FTX) the company received as part of a sale of its equity in FTX in 2021. The sale of FTT by Binance had server impacts on the price of FTT as was earlier predicted by Bloomberg and Tech Crunch. The price of FTT tumbled on trading platforms delivering huge blows to the finances of FTX.
The low trading volume of FTT also made things worse for the value of the token. Along with this, the conflict between Zhao and Bankman-Fried on Twitter pushed down the value of FTT and other cryptocurrencies likewise. Sam Bankman-Fried is the Chief Executive Officer of FTX.
While announcing the offer to acquire FTX, Zhao had asked other cryptocurrency exchanges to avoid using tokens as collaterals for financial and non-financial transactions.