Binance Backs Out of FTX Acquisition After Due Diligence
After reviewing FTX's internal books, Binance withdrew from the acquisition deal, citing mishandled customer funds and alleged investigations.
On November 9, 2022, Binance officially backed out of its proposed acquisition of FTX after conducting due diligence on the company's internal financial records. In a statement, Binance cited reports of 'mishandled customer funds and alleged US agency investigations' as reasons for withdrawing from the deal, suggesting that what they discovered was far worse than anyone had publicly known.
The cryptocurrency market plunged further on the news, as it became clear that FTX was beyond saving and that customer funds were likely permanently lost. The collapse of the rescue deal meant that FTX's problems were not merely a liquidity crisis that could be solved with an influx of capital, but rather represented fundamental insolvency with customer funds missing entirely.
For the Bitcoin ecosystem, Binance's withdrawal from the acquisition was a critical moment that transformed FTX's crisis from a potential recovery story into an inevitable bankruptcy. The due diligence process had apparently revealed a situation so dire that even Binance, FTX's largest competitor with resources to absorb losses, determined the company was unsalvageable.
This suggested that the scale of fraud or mismanagement at FTX far exceeded what the public understood at that point. The revelation of mishandled customer funds confirmed the worst fears of Bitcoin advocates who had long warned about the risks of centralized exchanges operating without transparency or proper financial controls.