Binance backs out of deal to buy FTX

The world’s largest crypto exchange by volume, Binance, said it would walk away from a deal with the third largest crypto exchange by volume, FTX.

On Tuesday, Binance signed a letter of intent to purchase its troubled competitor, FTX, in what appeared to be a potential bailout of the latter amid a liquidity crunch. But just a bit over 24 hours later, that plan crumbled.

Binance backed out after reviewing the company’s structure and books, it said in a statement to The Wall Street Journal. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of [FTX],” Binance said in a tweet.

“Every time a major player in an industry fails, retail consumers will suffer,” Binance continued. “We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.”

Binance and FTX did not immediately respond to TechCrunch requests for comment.

Earlier today, sources familiar with the matter told CoinDesk that FTX’s loan commitments raised concerns among Binance’s top brass. The report follows Binance CEO Changpeng Zhao tweeting that FTX “going down is not good for anyone in the industry.”

This is a developing story and may be updated if new information arises.