It gets worse with each passing hour for Sam’s exchange, FTX.
As the would-be savior, Binance walks away, despite their albeit non-binding Letter of Intent, citing via their Twitter handle “mishandled customer funds and alleged US agency investigations” as reasons for calling off the acquisition post-due diligence.
“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,” Binance said Twitter.
The SEC, Federal Trade Commission, and Commodity Futures Trading Commission opened investigations into FTX this morning. With Binance having to contend with multiple open investigations of its own — including one involving The Department of Justice and the IRS concerning “funds tied to criminal activity flowing through the exchange,” it doesn’t take a wild imagination to understand how this adversely affects FTX.
With its native token dropping as if pulled by gravity, FTX finds itself between a rock and a hard place, as Bloomberg reports suggest the hole in its balance sheet could be as large as $8 billion.
Notably, websites linked to the foreign arm of crypto exchange FTX were down on Nov. 9 following the debacle. Websites for Alameda Research and the company’s venture capital arm, FTX Ventures, were offline and made private, while both FTX’s main site and FTX US’ website remain accessible. A notice on its website read: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”
According to Bloomberg, the popular exchange’s founder, Sam Bankman-Fried, a self-proclaimed “effective altruist,” has now lost more than 94% of his wealth in a single day.
The exchange, before events unfolded, was worth 32 billion dollars but got offered to Binance for $1 as earlier reported by the Cryptobasic, but “no one is gonna want to buy billions of dollars of messy debt for $1.”
The seeds of FTX’s downfall were sown months earlier, according to interviews with several people close to Bankman-Fried reports Reuters, stemming from mistakes Bankman-Fried made after he stepped in to save other crypto firms as the crypto market collapsed amid rising interest rates and communications from both companies that have not been previously reported.
Meanwhile, in light of prevailing realities, venture capital firm Sequoia Capital announced to shareholders it would completely write off its more than $210m capital investment in FTX, as the cryptocurrency exchange is facing bankruptcy.
“Based on our current understanding, we are marking our investment down to $0,” the company said in a statement on Twitter.
FTX was backed by big players in the venture capital scene, like BlackRock, SoftBank, Paradigm, Circle, and Multicoin Capital, amongst others.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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