Bitcoin price dipped below $16,000 on Wednesday afternoon after Binance, the largest crypto exchange, withdrew an emergency deal to buy rival FTX.
Binance said in a statement,
“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.”
Bitcoin plummeted to $15,985, the biggest cryptocurrency low since November 2020, according to crypto index platform CF Benchmark. It’s down 12% in the last 24 hours and 20% in the last 7 days.
The new development adds to growing concerns about FTX, its equity investors and investments, and the impact its troubles may have on other crypto companies across the industry.
“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,” Binance said in its statement.
Most of FTX’s legal and compliance personnel resigned on Tuesday night, according to a report Wednesday by Semafor, which is backed by FTX founder and CEO Sam Bankman-Fried, but not on Wednesday morning. The Coindesk report, citing unnamed people, said sources questioned the progress of the deal. finished.
The Securities and Exchange Commission (SEC) is also reportedly expanding its investigation into the US subsidiary of the cryptocurrency platform, according to The Wall Street Journal.
Farrell added that the debt gap is likely to exceed $2 billion, but $6 billion won’t surprise him.
So far FTX has declined to comment on the matter.
Other cryptocurrencies also crashed on Wednesday as events unfolded.
Ether (ETH-USD), the second largest cryptocurrency, surged more than 15% in a single day from $1,336 to $1,118. The FTX exchange token FTT dropped 50% from $17 to $2.5.
Strongly backed by Bankman-Fried, cryptocurrency Solana (SOL), a rapidly declining coin ranking by market capitalization, has fallen more than 46% over the past 24 hours, from $28.19 to $12.7.
Over the past 24 hours, the market capitalization of all crypto assets has fallen by more than 10% from $980 billion to $805.97 billion, according to Coinmarketcap and Yahoo Finance charts.
Both companies’ competitor Coinbase Global (COIN) shares continued to sell after hours, dropping more than 10% from $50.83 to $45.9 on Wednesday. “We have no material exposure to FTX or FTT (and no exposure to Alameda).”
“The rapid fall from grace of a crypto exchange demonstrates how fickle the crypto industry could be. This is a red flag for COIN, where the vast majority of revenues are from trading crypto tokens,” Still, Mizuho Securities senior analyst Dan Dolev wrote in a Tuesday note.
Robinood (HOOD) shares fell more than 14% from $9.7 to $8.4 on Wednesday morning after falling 19.3% on Tuesday. Bankman-Fried owns a 7.6% stake in the stock and crypto trading platform, according to a May SEC filing.
However, Dolev downplayed the “kneeling” reaction at the time, pointing out that unlike Coinbase, Robinhood only gets 12% of its revenue from cryptocurrency trading.
As for other companies affected, VanEck Digital Assets portfolio manager Pranav Kanade told Yahoo Finance that the question remains whether FTX’s liquidity crisis is due to bad debt.
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