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Crypto investors rattled as Binance abandons its proposed acquisition of rival FTX

Binance, the world’s largest crypto exchange, is abandoning its proposed acquisition of the non-U.S. assets of rival FTX, amid the latter’s liquidity crunch.

“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,” according to a tweet by Binance’s official account Wednesday.

“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 wrote.

Executives at Binance have found a gap, likely in billions and possibly more than $6 billion, between the liabilities and assets of FTX, Bloomberg reported Wednesday, citing an anonymous source familiar with the matter. 

Representatives at Binance and FTX didn’t immediately respond to a request seeking comments.

On Tuesday, Changpeng Zhao, Binance’s chief executive, said the exchange had signed a letter of intent to acquire FTX.com, a separate entity from FTX.US, after FTX “asked for help.”

Read: Bitcoin falls to two-year low after crypto exchange Binance proposed to buy rival FTX

Investors are worried about any contagion, as concerns over FTX’s solvency spilled over to the already battered crypto market. BitcoinBTCUSD plunged Wednesday to as low as $16,863, the lowest level since November 2020.

FTX is the third largest crypto exchange by trading volume, according to CoinMarketCap. 

Also read: Crypto billionaire Sam Bankman-Fried’s net worth could shrink by over $13 billion

See also: FTX problems mean big headaches for its private equity investors

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