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It’s a huge twist. 

The crisis of confidence in the cryptocurrency industry deepened on November 9 after Binance announced that it would no longer buy FTX.com, owned by ex-billionaire Sam Bankman-Fried. 

The day before, Changpeng Zhao, the CEO and co-founder of Binance, the world’s largest bitcoin buying and selling platform by volume, announced that he would urgently acquire his rival which was on the verge of insolvency.

The deal was pending due diligence, however, warned Zhao, known by the initials CZ in the crypto sphere.

“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 http://FTX.com,” Zhao said in a message posted on Twitter.

He continued: “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.”

Retail Investors Would Lose MoneyZhao does not provide any information on the issues Binance teams discovered while opening FTX’s books. But according to press reports, Binance has discovered a financial black hole, which means a gap between the liabilities and the assets of FTX. And this amounted to over $6 billion.

Now, the consequences for clients of FTX and its sister trading platform Alameda Research are only unknowns. Their customers seem likely to lose their money. Zhao seemed to suggest that there has been malpractice at FTX.

“Every time a major player in an industry fails, retail consumers will suffer,” Zhao also said. “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 decentralization, the ecosystem will grow stronger,” he said.

U.S. regulators have opened an investigation into FTX’s use of its clients’ funds, according to Bloomberg News. 

The demise of 30-year-old Sam Bankman-Fried’s empire is a debacle for the crypto industry as a whole. The former Jane Street Capital trader, who lost almost all of his fortune on November 8, had emerged since the summer as the savior of struggling firms and the institutional face of crypto. 

From now on, suspicion is on each firm: If Bankman-Fried was short on cash who wouldn’t be. Bitcoin (BTC), the largest cryptocurrency by market value, was down 11% to $16,168.06 on November 9.

Coinbase shares lost nearly 10%, while Robinhood shares fell nearly 14%. Bankman-Fried owns a 7.6% stake in Robinhood.