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FTX CEO Sam Bankman-Fried told employees he was exploring all options for his firm after a deal with cryptocurrency exchange Binance collapsed Wednesday after due diligence on the proposed bailout.
The proposed deal between Bankman-Fried and rival Binance Chief Executive Officer Changpeng Zhao of Binance had been the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to $1.07 trillion.
Speculation about FTX’s financial health that started over the weekend snowballed into $6 billion of withdrawals in the 72 hours before Tuesday morning. Bitcoin revealed a proposal to acquire the rival exchange’s non-U.S. assets on Tuesday.
The deal to cover a “liquidity crunch” was non-binding and subject to further due diligence, leading some investors and analysts to question if it would go ahead.
“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 in a statement on Wednesday.
A representative for FTX did not immediately respond to a request for comment, but Chief Executive Officer Sam Bankman-Fried told employees in a Slack message viewed by Reuters that Binance had not previously expressed reservations about the deal.
“We obviously just saw Binance’s statement,” Bankman-Fried said in the message. “They relayed that to the media first, not to us, and had not previously informed us or expressed those reservations.”
Bankman-Fried said in the Slack message, “I’ll keep fighting for those, as best as I can, as long as it’s correct for me to. I’m exploring all the options.”
The Wall Street Journal reported on Wednesday that Bankman-Fried told investors he needs emergency funding to cover up to $8 billion of withdrawal requests, citing sources familiar with the situation. FTX did not immediately respond to a request for comment.
Zhao earlier on Wednesday tweeted a letter to staff that there was no “master plan” behind the deal and that “FTX going down is not good for anyone in the industry” and is not a win.
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