(New York) Cryptocurrency platform Binance said on Wednesday that it won’t come to the rescue of rival FTX.com after all, raising questions about the latter’s very survival and creating further turmoil in the world of virtual currencies. .
Binance, number one in its niche, announced on Tuesday that it was considering buying FTX.com to help it out of serious difficulties.
But after conducting an operations audit, “we have decided not to proceed with the transaction to acquire FTX.com,” the company explained in a tweet.
The company also mentions the appearance of press reports on mismanagement of client funds by FTX and on investigations by US authorities.
“At first, our hope was to be able to help FTX customers provide liquidity, but issues are beyond our control or beyond our ability to help,” Binance noted.
The future of FTX.com, and its founder Sam Bankman-Fried, is now uncertain.
The company did not immediately respond to a request from AFP.
But according to Bloomberg, quoting a person familiar with the talks, Sam Bankman-Fried told investors at FTX.com that without an imminent influx of cash, the company would have to file for bankruptcy.
The platform needs up to $8 billion and is trying to find it by borrowing, selling shares or a combination of the two, the entrepreneur reportedly added.
Withdrawals not possible
However, FTX was still considered a solid player in the sector until recently. Its founder is a figure in the world of cryptocurrencies, and FTX had been valued, during its last fundraising in January, 32 billion dollars.
But doubts have emerged in recent days about his accounts and his relationship with the Alameda cryptocurrency investment fund, also founded by Sam Bankman-Fried.
Binance boss Changpeng Zhao, saying FTX asked him for help due to a “significant liquidity crisis,” signed a letter of intent on Tuesday to buy FTX.com, which does not include the branch. American FTX.us.
However, he also specified that he would conduct an audit for a few days, a usual procedure in merger-acquisition operations, before confirming his intention.
“Every time a major player in an industry goes bankrupt, consumers suffer,” Binance pointed out on Wednesday, suggesting that FTX.com customers could suffer from the situation.
The platform’s help page displayed the following message: “FTX is currently unable to process withdrawals. We strongly advise against making deposits. »
This turbulence is shaking the cryptocurrency sector, already scalded in recent months by several bankruptcies and investor preference for less risky assets.
Bitcoin fell below $16,000 on Wednesday for the first time in two years.
FTX’s situation deteriorated in a few days.
The article from a specialized site first mentioned Alameda’s massive investments in FTX’s own cryptocurrency, the FTX Token (FTT), a reflection of lame accounting. Changpeng Zhao soon after announced that he was selling his reserves of FTT, which Binance held as part of a capital outflow from FTX.
Sam Bankman-Fried then qualified criticism of the financial health of his company as “unfounded rumors” and still assured Monday: “FTX is doing well”.
But the platform’s customers heard it differently and started to withdraw their funds en masse. Sam Bankman-Fried then turned to his rival to try to save the furniture.
An astonishing request from this entrepreneur, who until recently was compared to a white knight after offering in June to come to the rescue of companies linked to digital currencies BlockFi and Voyager Digital.
He was also known to regularly lobby politicians in Washington for increased regulation of the cryptocurrency industry.
Binance tweeted Wednesday that the cryptocurrency ecosystem will “get stronger” as “regulatory frameworks are developed” and the industry “continues to move towards greater decentralization.”