Cryptocurrencies Plummet for Second Straight Day Amid Repercussions Over Dumped Binance-FTX Merger

Cryptocurrency prices plummeted for the second day in a row after crypto exchange Binance announced it was pulling out of a failed deal to acquire rival FTX Trading.

Bitcoin plunged to a two-year low after confirming earlier rumors and news reports that Binance was ready to pull back on FTX trading, clashing between the two exchanges’ CEOs on Tuesday. The deal put a hold on Binance’s ability to perform due diligence on FTX’s balance sheet.

After the initial review, Binance said in a statement Wednesday that it had serious concerns that led to the withdrawal of the transaction.

“Initially, we hoped to be able to help FTX customers provide liquidity, but the issue is beyond our control and ability to help,” said Binance.

Bitcoin plunged more than 13% to $15,840, its lowest level since November 2020, according to CoinDesk. Earlier in the week, it was above $20,000. Ethereum, another major cryptocurrency, fell 13%.

FTX has agreed to sell to Binance after experiencing a cryptocurrency equivalent of a bank run. Customers fled the exchange worried about whether FTX had enough capital.

The sudden sale came as a shock to FTX CEO and founder Sam Bankman-Fried. He was hailed as a savior for helping launch a number of financially struggling cryptocurrency companies earlier this year.

FTX’s own crypto token, known as FTT, plunged more than 50% in reports. The token, currently worth around US$2.50, was worth 10 times its value just a week ago. Many of the concerns of cryptocurrency investors center on whether FTX’s balance sheet will become saturated with increasingly worthless FTT tokens whose value will not exceed the exchange’s debt, effectively rendering FTX insolvent. was

According to Bloomberg News and other news outlets, FTX is now under investigation by US authorities over how it handled customer deposits.

Stocks on listed exchanges exposed to cryptocurrencies also plummeted in the development. Robinhood shares fell about 14%, while Coinbase shares fell about 10%.

FTX is the latest cryptocurrency company to come under financial pressure this year as the value of crypto assets collapsed. Other failures include Celsius, a bank-like firm that accepted crypto deposits in exchange for yield, and an Asia-based hedge fund known as Three Arrows Capital.