Binance, the largest crypto exchange by volume, says it isn’t buying the beleaguered FTX crypto exchange, saying that “the issues are beyond our control or ability to help,” according to a company statement. The statement also said that “news reports regarding mishandled customer funds and alleged US agency investigations” led them to back out of the deal, which was announced yesterday.

While announcing their deal, FTX CEO Sam Bankman-Fried tweeted yesterday, “Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry relations with regulators. We are in the best of hands.” He has not tweeted today.

Maybe that’s because Bankman-Fried is reportedly looking to raise $8 billion to cover all the withdrawals people are trying to make from FTX, according to The Wall Street Journal, which also first reported the news of Binance’s change of heart. He’s warned investors that FTX may be facing bankruptcy if it can’t raise cash, Bloomberg reported

Even yesterday, the Binance deal seemed uncertain, with CEO Changpeng “CZ” Zhao emphasizing that there was only a letter of intent in place. Binance would be conducting due diligence throughout the week before actually going through with a legally binding purchase agreement, Zhao said.

Obviously, Binance didn’t like what it found. You can read its full statement, which it also tweeted, below.

Last week, CoinDesk published a blockbuster piece about Alameda Research, the sister firm of FTX that’s also owned by Bankman-Fried. The biggest asset on the firm’s balance sheet was FTX’s FTT token, CoinDesk reported. On Sunday, Binance’s Zhao said Binance would sell all its FTT holdings, which made the value of the token nose-dive. After that, Zhao offered to bail FTX out with the acquisition yesterday, which has now been terminated.

The people who are most likely to get hurt if FTX folds are its customers. The Federal Deposit Insurance Corporation has specifically said crypto stored or invested in FTX isn’t covered by the protections afforded to regular banks.

In a tweet yesterday, Zhao summed up where he believes FTX went wrong: exchanges should never use their own tokens as collateral, and they should have large reserves set aside instead of using their capital “efficiently.” That tweet on its own is hair-raising, since it implies FTX may have accepted FTT as collateral on a loan — without saying to whom.

One extremely gnarly possibility, laid out by Matt Levine in Bloomberg, is that FTX loaned its sister company Alameda Research money and accepted FTT as collateral on the loan. Worries about that possibility, even if it’s not the reality, may have sparked a bank run.

US regulators have begun a probe of how FTX managed its clients’ funds, according to Bloomberg. Many of the firm’s legal and compliance staff quit their jobs on Tuesday, Semafor reported. (One of Semafor’s investors is Bankman-Fried.)

Binance isn’t free from scrutiny either — both the SEC and DOJ are looking into how it conducts business, with the latter investigating whether its platform has allowed for money laundering, according to The Wall Street Journal.

As of Wednesday, both Alameda Research and FTX Venture’s websites are inaccessible, as first reported by Cointelegraph. The main site for the FTX exchange still appears to be working.

Here’s Binance’s full statement on canceling the acquisition:

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 decentralization, the ecosystem will grow stronger.