Over the past couple of days, the cryptocurrency market has experienced several shocks, resulting in the price of major cryptocurrencies crashing in the past couple of days. The instability in crypto prices started when news broke out that Binance, the largest cryptocurrency exchange in the world was set to purchase the non-US parts of the FTX exchange, which was the third-largest exchange worldwide before crashing. Reportedly, FTX had been facing liquidity and debt issues for quite some time and had been exploring options to deal with this crisis. Moreover, the FTX crypto, the native coin of the FTX exchange, also dropped massively in value after the revelations. On Tuesday, November 8, Binance signed a letter of intent to purchase FTX, but in just over a day, the plan seems to have fallen apart.
As per the Wall Street Journal, the team at Binance had a closer look at FTX's financial profile, company structure and accounts books, and then came to the realisation that these issues are even beyond their capacity to fix. The CEO of Binance, Changpeng Zhao tweeted that ‘FTX going down is not good for anyone in the industry.' Binance said in a statement to the Wall Street Journal about the FTX deal:
“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,”- Binance told the Wall Street Journal
Binance further tweeted:
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 https://t.co/FQ3MIG381f.
November 9, 2022In 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.
November 9, 2022Every 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.
November 9, 2022Crypto Prices Crashed As A Result Of The Cancelled Deal
First, the liquidity and debt issues at the FTX and then the Binance-FTX acquisition deal falling apart created justified fears in the minds of investors, as the recent TerraLuna crash in May had completely rocked and destabilised the crypto market. Many investors pulled out their investments for the fear of crypto prices crashing and many FTX users also pulled out their funds for fear that the platform would collapse. As a direct result of these large-scale withdrawals and the panic that followed, the prices of major cryptocurrencies also crashed. As per CoinMarketCap, Bitcoin lost about 10% value in the last 24 hours and is currently sitting at a low price of $16,647. Ethereum, the second largest cryptocurrency, also lost about 9.5% in value, going down to a price of $1,184. BNB also lost around 10.62% of its value, going down to the price of $282. Other cryptocurrencies like Cardano, Dogecoin and Ripple also lost value. Over the past day, the global crypto market cap went down by 7.8%, with the current value at $836.38 billion.
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