Over a million customer crypto accounts are at risk after crypto exchange Binance said it was abandoning its rescue takeover of rival exchange FTX.
As of Wednesday evening, the FTX website was down, making it impossible for customers to access their crypto accounts. FTX had previously suspended customer withdrawals and advised against making further deposits.
It comes just hours after reports the US finance watchdog, the Securities and Exchange Commission, was expanding its investigation into FTX amid concerns of potential securities law violations, and comes just a day after Binance said it planned to acquire the ailing company.
Binance said in a tweet: “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.”
The crypto firm added: “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”
As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of https://t.co/FQ3MIG381f.
— Binance (@binance) November 9, 2022
FTX was valued at as much as $40 billion (£35 billion) at the beginning of this year, according to Forbes, while founder Sam Bankman-Fried was estimated to have a wealth of $16.6 billion.
But on Sunday, the billionaire founder of Binance, Changpeng Zhao said he would liquidate Binance’s holdings in FTT, a crypto token operated by FTX, because of “recent revelations,” leading to a liquidity crisis for FTX after the value of FTT plummeted.
As of 2021, FTX said it had 1.2 million registered users across its platforms.
Binance is the world’s largest cryptocurrency exchange, with founder Chanpeng Zhao estimated to have a wealth of $17.4 billion.
The firm was put investigation by the US Department of Justice in 2021 over allegations of money laundering. Binance has been banned from regulated activity in the UK by the Financial Conduct Authority.
