Shortly after beginning its due diligence, cryptocurrency exchange Binance is reportedly “likely” to end the potential deal to acquire rival crypto exchange FTX.
Binance was “taken aback” by what it found, The Wall Street Journal (WSJ) reported Wednesday (Nov. 9), citing an unnamed source.
In a tweet posted earlier Wednesday, Binance CEO Changpeng Zhao shared a note he had sent to the Binance team globally in which he said “due diligence for the deal is on-going” and told the team “do not comment on the deal, publicly or internally.”
In the spirit of transparency, might as well share the actual note, sent to all Binance team globally a few hours ago.https://t.co/IUNkPcLC8T pic.twitter.com/XGlIJB7EV5
— CZ 🔶 Binance (@cz_binance) November 9, 2022
The WSJ report comes one day after both Zhao and FTX CEO Sam Bankman-Fried said in separate tweets that they aimed to see Binance acquire FTX.com, pending due diligence.
As PYMNTS reported Tuesday (Nov. 8), the potential acquisition was driven by a “liquidity crunch” at FTX.
To protect users, Zhao said in a Tuesday tweet, Binance signed a non-binding letter of intent to acquire FTX and cover that crunch. He said that the company would conduct full due diligence in the days ahead.
Bankman-Fried tweeted Tuesday: “Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in.”
Those tweets came three days after Zhao tweeted that Binance would liquidate its holdings of FTX’s FTT token.
CoinDesk had reported four days earlier, Nov. 2, that the balance sheet of trading firm Alameda Research — which is a sister company of FTX — is “full of” the FTT token and that although there is nothing wrong with this, it shows that the trading firm is largely based on its sister company’s token.
Zhao tweeted Nov. 6 about the FTT token: “Due to recent revelations that have come to light, we have decided to liquidate any remaining on our books.”
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