Crypto exchange Binance had signed a letter of intent to acquire rival FTX Trading, the companies said Tuesday, but Binance said Wednesday that it will not proceed with the move.

“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,” Binance tweeted.

Binance’s decision comes after the company reviewed FTX’s books and structure. “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,” Binance said, adding “we believe in time that outliers that misuse user funds will be weeded out by the free market.”

FTX faces a liquidity crunch, Binance founder Changpeng Zhao noted on Twitter Tuesday. 

“There is a lot to cover and will take some time,” he wrote. “This is a highly dynamic situation, and we are assessing the situation in real time. Binance has the discretion to pull out from the deal at any time.”

FTX is continuing to operate normally during this period, founder and CEO Sam Bankman-Fried assured customers, but its future remains unclear as of Wednesday. Bankman-Fried told investors he needs $8 billion to avoid a shortfall from withdrawal requests by customers, The Wall Street Journal reported. 

Bitcoin price dropped Wednesday in part because of the news of the second biggest crypto exchange facing a financial crisis. It dropped to just over $16,000, the lowest the cryptocurrency has been since late 2020. 

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