Cryptocurrencies in free fall, skip the Ftx bailout with Binance
Binance backs up on bailing out rival Ftx. An Audit Reversed the Digital Currency Exchange Platform, Triggering a Slide in the Cryptocurrency Market
Binance lets rival Ftx drown, throwing the cryptocurrency world into turmoil.
The US cryptocurrency exchange platform Binance canceled overnight the buy plan of struggling rival Ftx.com, for which it had already signed a letter of intent, triggering a sharp dip in the price of digital currencies.
The acquisition plan fell less than 24 hours after both companies' top management announced the deal. It was an operation of great importance for the sector: Binance is in fact the leading platform in the world by volume of exchange of cryptocurrencies, while Ftx, founded in 2017 by Sam Bankman-Fried, is the fourth. The latter is suffering from a serious liquidity crisis, despite having acquired a leading role in the US blockchain industry and being considered a rapidly growing reality, despite the simultaneous decline in the value of digital currencies.
In a statement, Binance attributed the rethinking to "the results of corporate due diligence, as well as the latest press reports regarding alleged mismanagement of client funds and US authorities investigations" against Ftx.
According to media reports, Bankman-Fried told investors yesterday that FTX needed funding of up to $ 8 billion after it was inundated with withdrawal requests from customers.
This series of announcements have plunged valuations across all cryptocurrencies, undermining investor confidence in the industry. As Reuters points out, the cryptocurrency market has dropped about two-thirds from its peak at $ 1.07 trillion.
All the details.
BINANCE BEHIND THE FRONT IN THE ACQUISITION OF THE FTX RIVAL
The decision came after an audit by Ftx. “In the beginning our hope was to be able to sustain and provide liquidity, but the problems are beyond our control and our ability to help,” says Binance.
The move comes the day after Binance, one of the largest cryptocurrency trading platforms in the world, tentatively agreed to buy Ftx in liquidity crisis.
HOW DOES FTX GO
Ftx had a valuation of $ 32 billion at the beginning of the year and counted on blue chips of the caliber of BlackRock among its supporters. In a sector defined as a 'far west' by the American authorities, Ftx was considered one of the best managed companies only a few months ago thanks to its founder Sam Bankman-Fried. In recent days, however, Ftx has experienced an investor flight that has brought it to its knees.
On Ftx the lighthouse of the SEC is on, which has expanded the investigation underway for months, recalls Ansa . For FTX CEO Sam Bankman-Fried, the ongoing crisis is a severe blow. Long considered the face of the crypto industry, just a few months ago it had pledged nearly a billion dollars to rescue troubled platforms. Now he is the one who needs to be saved. The speed of the FTX crisis took many observers of the digital currency industry by surprise as well as its customers and authorities, who considered it one of the best-managed critpo companies.
WHAT WILL HAPPEN NOW?
Binance's reverse raises many doubts about Ftx's future as several crypto companies have filed for bankruptcy this year, leaving investors wondering how to recover their funds.
Without a cash injection, cryptocurrency exchange Ftx.com will have to file for bankruptcy, CEO Sam Bankman-Fried told investors according to media reports.
SIGN OF WIDER SUFFERING IN THE SECTOR
But the FTX turmoil is the latest sign of trouble in the cryptocurrency industry. Cryptocurrency prices plummeted this year as a larger decline in financial markets prompted investors to move away from riskier assets.
Bitcoin and other cryptocurrency-related assets have dropped dramatically over the past two days as traders are concerned about the fallout from a potential collapse of Ftx, one of the largest cryptocurrency trading venues, and Alameda Research, a major trading company. digital assets also controlled by Bankman-Fried.
Bitcoin, the leading cryptocurrency, lost more than 14% to less than $ 16,000, its lowest level since late 2020. FTT, the smallest token linked to Ftx, fell a further 67%, after plunging 72%. % Tuesday.
"It has been a truly devastating year for the industry," Ryan Wong, senior researcher at cryptocurrency exchange Huobi, told Reuters . Wong stressed that the turmoil in the sector "would lead to massive public distrust of centralized institutions."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia-on-demand/criptovalute-in-caduta-libera-salta-il-salvataggio-di-ftx-con-binance/ on Thu, 10 Nov 2022 09:23:14 +0000.