• Sun. Apr 21st, 2024

Binance Pulls Rug on FTX Deal- US Regulators Investigating FTX’s Dealings

Binance Buys FTX

 

Illustration shows Binance and FTX logos

 Cryptocurrency exchange Binance is likely to walk away from a deal to buy embattled rival FTX, the Wall Street Journal reported on Wednesday, citing a person familiar with the matter.


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Binance was taken aback by “a big hole it found in FTX’s finances”, the report said.

Binance and FTX did not immediately respond to E-Crypto News requests for comment.

Binance signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange, in a stunning bailout that raised fresh concerns among investors about cryptocurrencies.

The U.S. Regulators

The U.S. securities regulator is investigating crypto exchange FTX.com’s handling of customer funds amid a liquidity crunch, as well as its crypto-lending activities, a source with knowledge of the inquiry said on Wednesday.


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The Securities and Exchange Commission (SEC) is examining whether the platform is following securities laws related to the segregation of customer assets and trading against customers, the source said. The probe began a number of months ago.

The Commodity Futures Trading Commission (CFTC) is also probing the issue, Bloomberg reported earlier on Wednesday.

FTX.com did not immediately respond to Reuters’ requests for comment.

The crypto industry has been in tumult as speculation about FTX’s financial health snowballed into $6 billion of withdrawals in the 72 hours before Tuesday morning. Crypto giant Binance later on Tuesday said it signed a nonbinding agreement to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange.

The SEC is also scrutinizing the firm’s relationship with its U.S. counterpart FTX US and Chief Executive Officer Sam Bankman-Fried’s proprietary trading firm, the source said.

An SEC spokesperson declined to comment, saying: “The SEC does not comment on the existence or nonexistence of a possible investigation.”


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Kevin Moore - E-Crypto News Editor

Kevin Moore - E-Crypto News Editor

Kevin Moore is the main author and editor for E-Crypto News.