Binance Abandoned Its Proposed Rescue of FTX.com

Binance announced at 4:00 p.m. Eastern time on November 9, 2022 that it would not pursue its proposed acquisition of FTX.com, withdrawing the most visible potential backstop for the rival cryptocurrency exchange one day after the companies disclosed a non-binding rescue arrangement.

Binance attributed its decision to corporate due diligence and contemporaneous reports concerning possible mishandling of customer funds and alleged investigations by United States agencies. Those were Binance’s stated reasons, not findings established in a public adjudication on November 9. The exchange also said the problems were beyond its control or ability to resolve.

The reversal mattered because FTX’s immediate difficulty had already moved beyond an ordinary decline in its exchange token. A large centralized trading venue had acknowledged a liquidity crunch and sought emergency assistance from its principal competitor. Binance’s withdrawal meant the preliminary agreement no longer offered customers or counterparties a plausible route to an externally financed resolution.

A rescue proposal lasted one day

On November 8, Binance chief executive Changpeng Zhao said FTX had requested help and that Binance had signed a non-binding letter of intent to acquire FTX.com and help cover its liquidity crunch. The proposal was subject to due diligence. Contemporaneous accounts said the companies had not disclosed detailed terms and that their United States operations were outside the proposed transaction.

That structure was important: a letter of intent was not a completed acquisition, committed capital injection or guarantee of customer withdrawals. Binance retained the ability to leave after inspecting FTX’s finances. Its November 9 statement demonstrated that the distinction between an announced rescue and a funded transaction was material rather than procedural.

The public record available on November 9 did not disclose Binance’s due-diligence materials, quantify FTX’s liquid assets and liabilities or establish how much financing would have been required. Reports circulated estimates and allegations, but no audited event-day balance sheet was available. It was therefore possible to verify the cancellation and the existence of a severe liquidity problem without claiming that outsiders could yet measure the full shortfall.

Bitcoin and ether registered the shock

CoinMarketCap’s historical snapshot for November 9 listed bitcoin at $15,880.78, down 14.35% over its preceding 24-hour measurement window. The service reported approximately $102.91 billion of bitcoin trading volume for that same rolling window. Ether was listed at $1,100.17, down 17.46%, with approximately $38.86 billion in reported 24-hour volume.

Those figures are aggregate snapshot observations, not universal market closing prices. Cryptocurrency trades continuously across venues, and CoinMarketCap does not represent its dated page as a single regulated-exchange close. Its 24-hour percentages also span rolling comparison windows rather than the precise period following Binance’s 4:00 p.m. announcement. The data establish a broad and unusually sharp selloff on November 9, but they cannot assign every price movement solely to the abandoned transaction.

The market response nevertheless reflected an institutional concern larger than FTX alone. The episode exposed how customers of a centralized exchange depended on its internal custody, accounting and liquidity arrangements, while outside participants had limited means to verify those arrangements during stress. It also showed that another exchange’s preliminary rescue offer could not substitute for transparent, immediately available assets.

What remained unresolved

As November 9 ended, Binance had ruled out the proposed acquisition, but FTX’s ultimate legal status, customer recoveries and the truth of allegations concerning customer funds had not been determined. Treating the exchange as already bankrupt on November 9 would project subsequent events backward.

Later record

A Commodity Futures Trading Commission complaint filed on December 13, 2022 later reproduced the date and substance of Binance’s withdrawal. That filing corroborates the announcement’s historical record but contains allegations and later information that were not available as established facts on November 9.