Yahoo TV

STORY: It’s no deal for FTX and a very uncertain future.

Major cryptocurrency exchange Binance said on Wednesday it’s walking away from plans to buy a part of its smaller rival.

In a statement, Binance said:

"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com."

The U.S. securities regulator SEC is investigating the company's handling of customer funds amid a liquidity crunch, as well as its crypto-lending activities, according to a Reuters source.

Bloomberg reported that both the Justice Department and Commodity Futures Trading Commission are also looking into the company.

FTX.com did not immediately respond to Reuters' requests for comment.

The proposed deal between FTX CEO Sam Bankman-Fried and Binance CEO Changpeng Zhao had been the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets in the wake of rising interest rates.

The deal’s collapse leaves 30-year-old Bankman-Fried, who had previously been throwing lifelines to other faltering digital asset platforms, with dwindling options.

And a snowballing desperation for emergency funds, as Wall Street Journal reported that Bankman-Fried told investors on Wednesday he now needs to cover $8 billion of withdrawal requests.

The CEO said in a message to employees, seen by Reuters, his goals were to protect customers and provide any help he could for staff and investors, writing:

"I'll keep fighting for those, as best as I can, as long as it's correct for me to. I'm exploring all the options."

Bankman-Fried told staff Binance had not previously expressed reservations about the deal, and said he was “deeply sorry” about the situation.

Over the past two days, Bitcoin and other crypto-related assets have plunged as fears grow about the fallout of a potential collapse of FTX.