Binance will back out of its agreement to buy rival cryptocurrency exchange FTX, Binance said Wednesday afternoon, the latest in the sudden unraveling of billionaire Sam Bankman-Fried’s crypto titan FTX once valued at US$32 billion, taking down the value of digital assets with it.
Big Number
US$176 billion. That’s how much market cap the world’s 15 largest cryptocurrencies have shed over the last 72 hours according to Forbes’ tracker. The FTX-fueled crash sent the industry from $903 billion to US$727 billion.
How FTX would fix its withdrawal pileup without Binance’s help. Bankman-Fried tweeted Tuesday Binance will help to “clear out liquidity crunches” and cover withdrawals “1:1,” and his firm will likely need outside help. Federal financial regulators are investigating FTX’s behavior during the liquidity crisis, according to Bloomberg. FTX isn’t legally required to cover withdrawals in the same way a FDIC-insured bank would be, setting up a potentially dire scenario for customers. GlobalBlock analyst Marcus Sotiriou told Forbes in July bankrupt crypto firms are “in a really sticky situation because they’ve been irresponsible with clients’ funds, somehow lost out and are now unable to pay back their clients—and there’s no guarantee they’ll pay the money back.”
“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,” Binance tweeted.
Bankman-Fried once referred to himself as a modern-day J.P. Morgan for his knack for buying up struggling rivals, making FTX’s bailout all the more dramatic and ironic. It’s been a year to forget for the nascent industry, with several notable crypto exchanges and lenders going under and the top assets shedding roughly 70% in value year-to-date.
Further Reading
This article was first published on forbes.com
Crypto Crash Deepens: Bitcoin Hits 2-Year Low After FTX Implosion (Forbes)
Is This The End For Sam Bankman-Fried? (Forbes)
Crypto Crash Intensifies Amid Downfall Of Industry’s ‘White Knight’ Bankman-Fried (Forbes)