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Cryptocurrency exchange Binance has walked away from a deal to acquire struggling rival firm FTX, which holds naming rights to the home arena of the NBA’s Miami Heat.
Earlier this week, Binance agreed a deal to purchase FTX, which has been struggling following a surge in withdrawals. According to the Reuters news agency, FTX is being investigated by the US Securities and Exchange Commission over its handling of customer funds, as well as its crypto-lending activities.
Binance had signed a letter of intent to buy FTX, which also sponsors Major League Baseball. The decision by Binance to pull out of the deal raises doubts over the future of FTX and its sponsorship deals within sport.
A Binance spokesperson told CoinDesk: “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. Every time a major player in an industry fails, retail consumers will suffer.
“We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market. As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralisation, the ecosystem will grow stronger.”
Following the news, the price of Bitcoin sank by more than 13% to a two-year low. The price of Ethereum also sunk by 13%. A notice on FTX’s website reads: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”
FTX has sponsored Miami Heat’s home arena since the start of the 2021-22 NBA season.
The venue formerly known as AmericanAirlines Arena is now called FTX Arena as part of a long-term deal, which was approved by the NBA in April 2021.
Financial terms of the agreement were not disclosed but it was reported at the time that the deal will be worth $135m (£118m/€136m) over 19 years, with $90m to be given to Miami-Dade County, which owns the arena.
FTX also serves as the official and exclusive cryptocurrency exchange partner of the team, with this deal working “in tandem” with the naming-rights agreement.
The Heat’s home had been known as AmericanAirlines Arena since it opened in December 1999. AmericanAirlines announced in 2019 that it would not extend its $2m per year deal once it ended in 2020.
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