Crypto's biggest M&A deal, between Binance and FTX, looks unlikely to close

Crypto exchange Binance, the world's largest by volume, signed a letter of intent on Tuesday to buy struggling competitor FTX in what appears to be a potential bailout of the latter amid crunching liquidity. But after less than a day of due diligence, it seems highly unlikely that Binance will go ahead with the deal, sources told CoinDesk.

Specifically, FTX's loan commitments have raised concerns among Binance's top brass, Coindesk reported. The report comes shortly after Binance CEO Changpeng Zhao tweeted that FTX "the drop is not good for anyone in the industry", and the current episode has "severely shaken" the confidence of investors. consumers.

FTX, run by billionaire Sam Bankman-Fried, found itself in trouble this week after reports surfaced that the exchange was unusually tied to its sister entity, Alameda Research, which held large amounts of the token Native FTT of the exchange.

In the 72 hours before Binance and FTX announced Tuesday morning's deal, the latter exchange saw some $6 billion in withdrawals from its platform fueled by investor fears about its health financial. And he is involved in a months-long investigation by US regulators into potential mismanagement of client funds that came to light on Wednesday.

Zhao and Bankman-Fried had clashed for months on social media over regulatory issues and other points of contention before announcing the potential deal. Their tension came to a head earlier this week after Zhao tweeted that Binance would liquidate its holdings of FTT, which it acquired through its participation as the first backer of FTX, as a measure of "management of risks after release".

Tensions appeared to ease on Tuesday when Bankman-Fried called Zhao, asking the Chinese-Canadian billionaire to save his stock market by buying his non-US operations. Bankman-Fried sent a "huge thank you" to Zhao and Binance in a series of tweets following the call, noting that the deal was "a user-centric development that benefits the entire industry". p>

Binance was not Bankman-Fried's first call. A spokesperson for crypto exchange OKX told Reuters on Wednesday that Bankman-Fried approached OKX on Monday morning about a potential deal, which OKX says it declined due to concerns about industry consolidation.