"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," says Binance in a series of tweets.

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 https://t.co/FQ3MIG381f.— Binance (@binance) November 9, 2022

The u-turn comes a day after Binance and FTX agreed the takeover, although both stressed that this was predicated on a full due diligence process.

Since then, Bloomberg has reported that the Securities and Exchange Commission and the Commodity Futures Trading Commission have been investigating FTX’s relationship with FTX US as well as sister entity Alameda Research for months.

Alameda Research is the crypto trading firm run by FTX chief Sam Bankman-Fried. Last week, CoinDesk reported on a leaked balance sheet showing that FTX’s FTT native token made up about a quarter of Alameda’s assets.

That revelation helped spark the liquidity crunch at FTX, with Binance saying it would dump its holdings of the token.

With FTX facing a surge in withdrawals over recent days, raising concerns about its ability to survive, Bankman-Fried approached rival Changpeng Zhaoa bout a possible deal.

However, within hours of that process beginning, Binance found a financial back hole, according to Bloomberg, citing a source suggesting a gap between liabilities and assets at FTX that could top $6 billion.