Hull's proposed sale to a consortium from China and Hong Kong is off, BBC Radio Humberside understands.
An agreement to sell to a group led by Dai Yongge and Dai Xiu Li was reported to have been struck a fortnight ago.
That deal has fallen through amid speculation they do not meet the FA's fit and proper person test.
"As I understand it, the problem is not Hull City on the takeover being off," said BBC Radio Humberside's David Burns.
"It's nothing Allam has done so I assume it's the fit and proper person tests. The Premier League have told me they can't comment on the situation."
Hull's return to the Premier League this season has been overshadowed by off-the-pitch issues.
The club have been without a manager since Steve Bruce resigned in July after a fall out with vice-chairman Ehab Allam.
|Assem Allam in focus|
|Allam was born in Egypt but came to England in the 1960s. He studied economics at the University of Hull and has remained in the city.||In 2016, the Allam family was ranked 437th in the UK on the Sunday Times Rich List with an estimated worth of £240m.|
|Allam joined the firm Tempest Diesels as finance director in the late 1970s and later bought the company. He renamed the business, which manufactures and supplies generators, Allam Marine.||Allam has broken Hull City's transfer record on five occasions since taking charge of the club in 2010, the most recent being the reported £13m paid for England midfielder Ryan Mason.|
Bruce had reservations about the direction of the club and the lack of transfer activity, and Hull did not make a summer signing until 30 August.
The club put takeover talks on hold until after the window closed to "ensure stability".
Caretaker-boss Mike Phelan managed to bring in six players before the deadline, including midfielder Ryan Mason from Tottenham.
Hull fans protested against the "ill-considered ideas" of the promoted club's owners during their first two home games of the Premier League season, against Leicester City and Manchester United.