Changpeng Zhao moved quickly when Sam Bankman-Fried’s FTX.com was on the verge, offering to take it and stop any further cryptocurrency.
Within hours of their due diligence, Binance executives found themselves staring into a financial black hole – doubting whether the firm should save its once-top rival.
According to a person familiar with the matter, Binance is unlikely to follow through on its acquisition of FTX any longer. On the issue of the difference between liabilities and assets on FTX, which is probably in the billions, and possibly more than $6 billion, said the person, who was not authorized to discuss the matter publicly.
A firm spokesperson said that Binance is still in the early stages of “due diligence” and “will communicate further when we have anything more important to share.”
Going forward with the deal given the shortfall will be a tough shot for Zhao, better known as CZ. He said in a memo to employees that he had no “master plan” and that the surprise collapse of FTX “doesn’t bode well for anyone in the industry.”
In addition to FTX’s financial losses, it could also face regulatory pressure. Bloomberg News reported Wednesday that the Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating whether the firm properly handled client funds as well as its relationships with other parts of Bankman-Fried’s crypto empire. Is.
An acquaintance said that it could take up to 30 days for Binance to do due diligence. The firm’s non-binding letter of intent allows it to acquire FTX in full, buy portions of the assets, or walk away.
An immediate issue is the way FTX has valued its utility token FTT and whether it should have been flagged at a lower price, the person said. His exchange will liquidate its FTT holdings, which were valued at $529 million at the time, after Zhao said that the coin had lost nearly 70%.
Zhao’s move follows a story from CoinDesk that said a potentially partial balance sheet showed that FTTs made up about a quarter of assets in Alameda Research, a business house owned by Bankman-Fried. The crypto news site previously reported that Binance was leaning against its FTX acquisition.
The person familiar said that Alameda is not involved in the proposed deal between Binance and FTX. Banksman-Fried had already said that the transaction would exit FTX.US, a separate exchange he founded.
This story has been published without modification in text from a wire agency feed.
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