In response to a rumour that federal investigators were looking into how FTX.com handled customer payments, the firm tweeted that the purchase fell through during the corporate due diligence phase.
The company said in a statement Wednesday on Twitter, “the crypto exchange Binance has pulled out of a deal to acquire rival digital currency company FTX just 24 hours after it announced the tentative agreement.”
Another significant market disruptor in a sector that is becoming more unstable is the about-face. Concerns about the financial stability of numerous businesses, whose digital assets have seen a dramatic decline in value in recent months, have led to the merger of two of the major crypto platforms in the world.
Binance said, “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.”
The turnaround casts question on the future of FTX, which was previously among the most well-known and valuable businesses in the cryptocurrency sector. According to CNBC, the company had a $32 billion private valuation early this year and may potentially be in financial trouble.
Inquiries about the transaction or the alleged probe were not immediately answered by FTX or the Securities and Exchange Commission.
In an internal memo earlier on Wednesday, Binance CEO Changpeng Zhao informed staff members that the transaction was not a part of Binance’s corporate strategy.