FTX is on the verge of a collapse after Binance pulled out of a deal to save the embattled crypto giant.
Cryptocurrency prices dropped to two-year lows overnight following Binance’s decision to pull out.
The reversal comes one day after Binance CEO Changpeng Zhao announced that the world’s largest cryptocurrency firm had reached a nonbinding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis.
On Monday night, facing a liquidity crunch, Bankman-Fried was scrambling to raise money from venture capitalists and other investors before he went to Binance, according to CNBC.
Earlier this year, FTX was valued at $32 billion by private investors.
A number of companies and celebrities are reported to have hefty investments in the company, while FTX also has big-ticket sponsorship deals with the likes of the Miami Heat basketball team and the Formula One squad Mercedes-AMG Petronas F1.
Binance said in a statement that after doing due diligence it would not proceed with the deal, explaining that reports of “mishandled customer funds and alleged US agency investigations” had played a part in its decision.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity,” Binance said in a tweet Wednesday. “But the issues are beyond our control or ability to help.”
News that Binance was walking away from the deal sent cryptocurrency values tumbling with benchmark cryptocurrency Bitcoin falling to a two-year low of $15.71 on Wednesday evening, against an all-time high of $64.86 in November 2021.