Less than a day after announcing a deal to buy rival crypto exchange FTX, Binance has said that it is not going ahead with the acquisition.

The exchanges had agreed a deal on Wednesday after FTX appeared to be in freefall earlier this week after reports found that the company’s native token, FTT, made up around a third of sister company Alameda Research’s balance sheet. Upon the release of this report, Binance chief exec Changpeng ‘CZ’ Zhao said that the company would liquidate its holding in FTT, sending both the token and the entire crypto market into a downward spiral as investors withdrew more than $6 billion in the 72 hours before Tuesday. This was described by some outlets as the crypto equivalent of a bank run, with customers sceptical of whether FTX had sufficient capital.

Shortly after that deal was struck to “avoid a liquidity crunch”, rumours began to circulate that Binance would not go through with the non-binding agreement. This was subsequently confirmed by Binance in a statement: “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.

“In the beginning, 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.”

FTX’s looming collapse has seen Bitcoin, the leading cryptocurrency and barometer for the overall crypto market’s health, plunge by more than 22 per cent in the past five days from over $21,000 on Sunday to a low of less than $16,000 on Wednesday night. Ethereum, the second largest coin, was down by over 25 per cent within the same period.

Publicly traded crypto exchanges also took a hit, with the shares of Robinhood and Coinbase down by 14 and 10 per cent respectively.

The WSJ on Wednesday also reported that FTX chief executive Sam Bankman-Fried had asked investors for $8 billion to cover withdrawal requests. Following this news, Bloomberg and others would go on to report that the Securities and Exchange Commission has expanded an investigation into FTX over how it managed customer funds.

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