The crypto exchange Binance has confirmed that it will not be buying out its competitor FTX, which is currently in serious financial trouble.
This bad news has caused a sharp drop in the Bitcoin (BTC) price, which has fallen to $15,600, dragging the entire crypto market with it.
The FTT price is currently around $2.30 but could end up at 0 if FTX goes down permanently.
In a post on Twitter, crypto exchange Binance detailed why it is backing away from buying FTX, citing mismanagement of customer funds by the crypto trading platform, as well as ongoing investigations into FTX.
Following the company’s due diligence, as well as the latest reports of mismanaged customer funds and alleged investigations by U.S. agencies, we have decided not to pursue the potential acquisition of http://FTX.com.
Initially, our hope was to help FTX’s clients provide liquidity, but the issues are beyond our control or ability to help. Any time a major player in an industry fails, retail consumers will suffer.
We have seen over the past few years that the crypto ecosystem is becoming more resilient and we believe that over time, the outlier players that abuse user funds will be weeded out by the free market.
As regulatory frameworks are developed and the industry continues to move toward greater decentralization, the ecosystem will become stronger.
A negative announcement from Binance
Binance says that the amount of money needed to bail out FTX exceeds its own capabilities, so it cannot help the crypto exchange, which is now threatening to fail.
Bloomberg and the Wall Street Journal reveal that FTX needs an $8 billion injection in order to resume normal operations, a staggering amount of money that is currently hard to find in the markets.
FTX CEO Sam Bankman-Fried has yet to speak publicly following Binance’s negative announcement.
The websites alameda-research.com and https://ventures.ftx.com are no longer available, while the FTX.com website now displays a red message indicating that the trading platform can no longer process customer withdrawal requests.
Justin Sun, founder of Tron (TRX), said he is currently working with his team to help FTX.
My team is working around the clock to prevent further deterioration. I am confident that the situation is manageable by following the holistic approach with our partners.
The entire crypto community is now waiting to hear whether FTX will be able to be saved or whether it will finally declare bankruptcy.