Binance won't save FTX

Key points: 

• Binance announced that it would not proceed with the deal with FTX.
• SEC and CFTC investigate the FTX exchange for possible mishandling of funds and its connection to FTX US and Alameda Research.
• Binance stated that issues with FTX are "beyond our control or ability to help".
• Shortly after Binance’s announcement, FTX’s website went offline and returned with banners warning that the exchange cannot process withdrawals and strongly discouraging deposits.

On Nov. 9, less than 48 hours after Binance CEO Changpeng Zhao announced his intention to bail out struggling rival FTX, Binance announced that it would not proceed with the deal.

A series of tweets from Binance confirmed that it “will not pursue a potential acquisition” of cryptocurrency exchange FTX, citing “reports of mishandling of client funds and an alleged U.S. agency investigation.”

The agency's investigation may be related to a Nov. 9 report by Bloomberg suggesting that the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are investigating the FTX exchange for possible mishandling of funds and its connection to FTX US and Alameda Research.

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

Among the reasons for not continuing to buy, Binance initially said it wanted to support struggling cryptocurrency exchanges by providing liquidity to customers, but said the issues were “beyond our control or ability to help.”

Binance also stated that retail clients will suffer any failures by major industry players, but said the ecosystem “becomes more resilient” and believes “out-of-control industry players who misuse user funds will be eliminated by the free market.”

Sad day. Tried, but

— CZ Binance (@cz_binance) November 9, 2022

Shortly after Binance’s announcement, FTX’s website went offline and returned about two hours later, with banners warning that the exchange cannot process withdrawals and strongly discouraging deposits.