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Binance Throws In The Towel on FTX deal – Exchange Needs $8 Billion, And Fast

Binance Throws In The Towel on FTX deal - Exchange Needs $8 Billion, And Fast
Binance Throws In The Towel on FTX deal - Exchange Needs $8 Billion, And Fast

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Binance, the world’s largest exchange by trading volumes, has announced that it will not continue with earlier plans to acquire FTX. This development has only worsened the situation since reports indicate that FTX needs $9.4 billion in rescue funds.

Binance pulls out of FTX deal

Binance has already said it will not continue with the deal to acquire FTX after conducting due diligence. Moreover, the investigations of US regulators into the exchange had also made the deal less attractive for Binance.

In the tweet, the exchange added that the strength of the cryptocurrency ecosystem would be guaranteed if there was a clear regulatory infrastructure in place and as the space evolved towards more decentralization.

FTX has displayed a message on its website telling users that it cannot process withdrawals and has also discouraged new deposits. However, a report by CoinDesk cited on-chain data showing that the exchange was processing withdrawals to some users.

FTX seeks $9.4 million in rescue funds

A report by Reuters has noted that the FTX exchange is looking to raise around $9.4 billion from investors to resume normal operations. The FTX CEO, Sam Bankman-Fried, had earlier sent a message to employees saying that he was planning to save the exchange by seeking new investors.

The Reuters report noted that some of the people that Bankman-Fried was in talks with are the Tron founder Justin Sun and the OKX exchange, allegedly planning to invest $1 billion each. The sources also cited that Tether would be among the investors. However, the CTO of Tether, Paolo Ardoino, has refuted the claims that Tether has “no plans to invest in or lend assets to FTX.”

On Thursday, FTX also confirmed an agreement with Tron to create a special facility that allows holders of BTT, HT, JST, SUN, and TRX to exchange assets on a 1:1 basis to their external wallets. The size of this facility will be determined weekly. As part of this deal, the Tron deposits for users will be disabled.

FTX used customer funds to support Alameda

Another report has said that The FTX CEO used $4 billion to support Alameda Research in May after the firm made losses. Part of these funds was customer deposits, but the exact amount has not been determined.

Alameda Research made several risky deals that resulted in notable losses for the firm. One of these deals was in Voyager Digital, where a $500 million loan agreement was involved. Voyager filed for bankruptcy one month after this deal.

Bankman-Fried posted a lengthy Twitter thread apologizing to users affected by the issues facing the exchange. In the thread, he said he was looking for a way to do right by customers, investors, and the exchange’s employees.

The entire drama surrounding FTX is attracting regulatory attention. The Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Department of Justice are already looking into the exchange’s failure.

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