Cryptocurrency prices plunged for a second straight day on Wednesday after crypto exchange platform Binance announced it was pulling out of its deal to purchase its failing rival FTX Trading.
The price of other digital coins also fell after Binance scrapped its deal to buy FTX, citing due diligence concerns. It has left FTX customers unable to make withdrawals from the exchange, which is used to buy and sell various digital tokens.
The reversal comes one day after Binance CEO Changpeng “CZ” Zhao announced that the world’s largest cryptocurrency firm had reached a nonbinding deal to buy FTX’s non-U.S. businesses for an undisclosed amount, rescuing the company from a liquidity crisis. Earlier this year, FTX was valued at $32 billion by private investors.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity,” Binance said in a tweet Wednesday. “But the issues are beyond our control or ability to help.”
On Monday night, facing a liquidity crunch, Bankman-Fried, FTX’ founder and CEO was scrambling to raise money from venture capitalists and other investors before he went to Binance, according to sources with knowledge of the matter. Zhao initially agreed to step in, but his company quickly changed course, citing reports of “mishandled customer funds and alleged U.S. agency investigations.”
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It’s unclear who is next in line to buy the hard-pressed crypto exchange. Bankman-Fried told investors that the company is facing a shortfall of up to $8 billion from withdrawal requests and needs emergency funding, according to a person familiar with the matter.
There are also fears of further crypto market volatility if FTX goes bust.
On Thursday Bitcoin fell below $16,000 (£14,049) for the first time since 2020 as investor confidence was hit by the news.
Ethereum, another popular digital coin, also tumbled before regaining ground.
There are also fears of further crypto market volatility if FTX goes bust.
On Thursday Bitcoin fell below $16,000 (£14,049) for the first time since 2020 as investor confidence was hit by the news.
Ethereum, another popular digital coin, also tumbled before regaining ground
