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Bitcoin plunges as CZ’s Binance pulls out of deal to rescue SBF’s exchange FTX


Cryptocurrency prices fall for the second day in a row after crypto exchange Binance said it would pull out of the deal. FTX Trading rival failure.

Bitcoin fell to a two-year low after Binance confirmed earlier rumors and news reports that it was ready to back out of the FTX deal, which struck between the CEOs of the two exchanges on Tuesday. . The deal is pending verification by Binance on FTX’s balance sheet.

After an initial review, Binance said in a statement Wednesday that it had significant concerns that convinced it to withdraw the agreement.

“Initially, we hoped to be able to assist FTX customers to provide liquidity, but the problem is beyond our control or the ability to help,” Binance said in a statement.

The bitcoin price fell more than 13% to $15,840, according to CoinDesk, its lowest level since November 2020. It was above $20,000 earlier in the week. The other major cryptocurrency, Ethereum, is down 13%.

FTX has agreed to sell itself to Binance after experiencing the crypto equivalent of banking. Customers left the exchange after worrying about whether FTX had enough capital. The sudden price drop was a shocking event for FTX CEO and Founder Sam Bankman-Friedwho was hailed as a savior earlier this year for helping several crypto companies in financial difficulty.

FTX’s cryptocurrency token, known as FTT, has dropped more than 50% in reports. The token, currently worth around $2.50, is worth 10 times that amount just a week ago. Many crypto investors’ concerns center on whether the balance sheet of an FTX affiliate called Alameda Research is saturated with increasingly worthless FTT tokens. , whose total value would not exceed the exchange’s debt, rendering FTX insolvent.

After Binance had a chance to look at FTX’s books, it became clear that the problem was too big to deal with. One person familiar with the matter, who cannot speak publicly because of the lack of authorization, described the books as a “black hole” in which the exchange’s assets and liabilities cannot be distinguished. FTX services and assets of Alameda Research hedge funds.

“The books are a nightmare, and the relationship between FTX and Alameda is at best incestuous,” said one person familiar with the matter.

In another illustration of FTX’s financial squeeze, Bankman-Fried asked its investors for $8 billion on Wednesday to cover withdrawal requests, according to The Wall Street Journal, citing The Wall Street Journal. anonymous sources.

FTX is currently under investigation by US authorities over how it handles customer deposits, according to Bloomberg News and other media outlets.

Shares of exchanges that are publicly exposed to cryptocurrencies also fell in tandem. Robinhood stock closed down about 14% and Coinbase the stock lost about 10%.

FTX is the latest crypto company this year to come under financial pressure as crypto assets have fallen in value. Other failures include Celsius, a bank-like company that took crypto deposits in return for profits, as well as an Asia-based hedge fund called Three Arrows Capital.

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