$1 Binance FTX deal is disabled unless FTX.US is part of the package: Source

$1 Binance FTX deal is disabled unless FTX.US is part of the package: Source

Binance will not move forward with its proposed deal to acquire FTX unless U.S.-based exchange partner FTX.US is part of the deal, according to a source with knowledge of the matter and text conversations reviewed by Blockworks.

According to the source, the fact that the Federal Trade Commission and the Commodity Futures Trading Commission opened investigations into FTX this morning means that Binance will not consider a deal for FTX's standalone operations. The deal was originally priced at $1, according to materials seen by Blockworks, but “no one is going to want to buy billions of dollars of messy debt for $1.”

However, legal advisers on the deal fear that US regulators would block any sale by a US company to Binance, as Binance has several investigations of its own pending - including one involving the Justice Department and the IRS, which launched an investigation into Binance in 2021, and another in which the CFTC was reportedly investigating whether US-based Binance users had access to derivatives trading.

Binance was ordered by federal prosecutors in 2020 to release notices about Zhao as they sought to determine whether the exchange violated the Bank Secrecy Act.

And just last week, Reuters reported that Binance helped facilitate nearly $8 billion worth of trades in Iran, possibly in violation of U.S. sanctions.

A second person with knowledge of the matter said: “100% if they are trying to sell FTX.US For Binance, regulators will say get out.”

Binance released a statement shortly after this story was published:

“Based on the Company's due diligence, as well as recent news of mishandled customer funds and alleged investigations by US authorities, we have decided that we will not pursue the potential acquisition of FTX.com.

Initially our hope was to be able to assist FTX's customers in providing liquidity, but the issues are beyond our control or our ability to help.

Any time a major player in an industry fails, retail customers will suffer. We have seen the crypto ecosystem become more resilient in recent years, and we believe that outliers who misuse user funds will be weeded out by the free market over time.

As regulatory frameworks evolve and the industry evolves towards greater decentralization, the ecosystem will become stronger.”

Updated November 9, 2022 at 3:59 p.m. ET with a statement from Binance.

. .

Post $1 Binance FTX deal is disabled unless FTX.US is part of the package: Source is not financial advice.