Crypto Frontline

United States – Binance, a cryptocurrency exchange, publicly announced that it would not buy its rival, FTX, because of mishandling funds. 

Binance revealed on November 9, Wednesday, about the halt in purchasing its rival, FTX, and the announcement was in public. The halt in the acquisition of FTX left this company in the wake of its previous liquidity crunch. 

According to Binance, the decision was because of corporate due attentiveness. Another reason why it will not purchase FTX is because of the mismanaged customer funds and accused US agency studies. 

Crypto’s tough year worsened because of the unexpected collapse and FTX’s probable emergency sale. FTX is one of the biggest cryptocurrency exchanges for virtual currencies. 

Binance is the biggest crypto trading platform regarding trading volume. As of November 8, Tuesday, there’s a signed letter of intent where this company will buy FTX. The letter amounts to an alternative bailout of a leader of the crypto ecosystem. Crypto users got the news a week after the uncertain position of FTX became clearer. 

If it goes through, the deal will consolidate the crypto exchange market unmatched. It’s given the significant role exchanges play in tying together the expanding crypto currencies’ universe. Binance might be FTX’s death knell if this company pulls out. The impact is equivalent to the immediate crisis of Bear Stearns, an investment bank. In 2008, this bank foreshadowed the bigger funding crisis that developed during 2008. 

According to the author of the newsletter entitled “Crypto is Macro Now,” Noelle Acheson stated that there’s so much they don’t know, which adds to the situation’s uncertainty. However, Acheson has never witnessed crypto market participants so shaken, even old-timer crypto traders. Acheson is Genesis Trading’s previous head of market insights, a crypto funding services firm. 

Acheson added that the news hit harder than the happenings in May to June because the questionable economic incentives triggered the situation, along with dubious hedge fund movement and shaky collateral. Also, a significant part of the cryptocurrency market infrastructure triggered the situation, which was a firm that had an outstanding reputation. 

The hard times of FTX are not over yet, and there’s a reason why. On Wednesday as well, most of the legal and compliance teams of the company quit. 

FTX has been a well-regarded firm in the digital asset industry until the current crisis. Sam Bankman-Fried, or SBF, even became the face of cryptocurrency in the US. The company was successful enough to purchase naming rights to the Heat’s arena home, an NBA team in Miami. It also bailed out other digital asset firms early this 2022 during the cryptocurrency winter.